So, you want dividends. Reliable income. A little…stability. Darling, that’s adorable. Let’s talk about pipelines. Specifically, the ones that promise you forever. It’s always the ‘forever’ promises that get you, isn’t it? Still, if you must chase yield, the energy midstream sector is where the slightly-less-terrible options reside. Two names keep popping up. Let’s dissect them, shall we? Mostly to distract myself from the sheer audacity of hoping for a guaranteed return on investment.
Energy Transfer
Energy Transfer (ET +2.68%). They’re offering a 7.4% yield. It sounds… generous. Almost suspiciously so. Like a charming stranger offering you a drink you know you shouldn’t accept. But hey, who am I to judge? They’ve bumped up their distribution by a little over 3% year-over-year, to $1.34 annually. It’s covered – 1.7 times, they claim – by their distributable cash flow. Which, let’s be honest, is industry jargon for ‘we’re currently able to juggle the numbers without things immediately collapsing.’ They’ve also improved their balance sheet, which is… good. It’s always good to not be actively drowning in debt. And they boast the highest percentage of ‘take-or-pay’ contracts in their history. Translation: people are obligated to pay them, even if they don’t particularly want to. Smart. Ruthless. I approve.
The real kicker? They’re banking on the AI data center buildout. Apparently, everyone needs more servers, and those servers need natural gas. They’re planning to spend up to $5.5 billion on growth capex this year. Billions. It’s just… a lot. They promise a 3-5% annual distribution increase. Which, naturally, is dependent on everything going exactly as planned. And when has anything ever gone exactly as planned?
Enterprise Products Partners
Enterprise Products Partners (EPD +5.05%). Now these are the people who’ve been at it for a while. 27 consecutive years of increasing distributions. 27! It’s… unsettling, frankly. Like a perfectly maintained facade hiding a crumbling interior. Currently yielding around 6.3%, with a 3% annual payout growth. Their coverage ratio is a solid 1.8 times. They’re… consistent. Predictable. It’s almost boring. And in this market, boring can be… good. Relatively speaking, of course.
Here’s the twist. They’re reducing growth capex. From $4.4 billion to a range of $2.5 to $2.9 billion. Smart. They’re realizing that throwing money at endless expansion isn’t always the answer. Which leaves them with… discretionary cash flow. Which they can use to pay down debt, buy back stock, or… acquire other companies. The usual. They expect modest growth this year, but double-digit growth in EBITDA and cash flow in 2027. Because, you know, projections. They’re always optimistic. Aren’t they?
So, is Enterprise a ‘sleep-well-at-night’ stock? Perhaps. If you can tolerate the inherent absurdity of hoping for a comfortable retirement in a world determined to disappoint you. It’s a high-yield dividend stock with… prospects. Let’s just say that. And honestly, in this game, that’s about as good as it gets.
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2026-02-15 00:12