2 No-Brainer High-Yield Energy Stocks to Buy Right Now, Starting With Energy Transfer
Energy Transfer and Enterprise Products Partners deliver high yields and are priced to buy.
Artificial intelligence (AI) may dominate the headlines, but two energy stocks stand out as high-yield options for investors. Energy Transfer (ET) and Enterprise Products Partners (EPD) are midstream energy master limited partnerships (MLPs) that transport, process, and export natural gas, natural gas liquids (NGLs), and crude oil. Despite the AI frenzy, these two companies are well-positioned to weather the storm without harming your portfolio.
Energy Transfer boasts a dividend yield of 6.69% at its current price, outpacing the S&P 500's average dividend of 1.06%. Enterprise Products Partners offers a yield of 5.99%, with a history of consecutive dividend increases for 28 years, including a 2.7% boost this year. While Energy Transfer's dividend history is shorter at just four years, it has been particularly aggressive in raising its dividend in recent quarters.
Both companies maintain robust distribution coverage ratios, with Enterprise Products Partners at 1.9x and Energy Transfer at 2.2x in the second quarter. This indicates ample excess cash for expansion and preserving balance sheet integrity. With increasing electricity demands from AI-driven data centers, manufacturing reshoring, and grid electrification creating structural tailwinds for natural gas, both companies hold dominant pipeline footprints linking key supply basins to gas-fired power generation markets.
Comparatively, both Energy Transfer and Enterprise Products Partners trade at lower multiples, below 14 times trailing earnings, making them even more attractive. Each company also possesses liquefied natural gas (LNG) and NGL export facilities along the Gulf of Mexico, with extensive pipeline networks and storage capacities.
In the second quarter, Energy Transfer reported a 80.1% year-over-year increase in net income at $2.09 billion and a 31% rise in adjusted EBITDA to $5.07 billion. Distributable cash flow also grew by 32% year-over-year to $2.59 billion. Enterprise Products Partners reported record net income, distributable cash flow, and adjusted EBITDA in the same period, with net income up 28% to $1.8 billion and adjusted EBITDA up 17% to $2.8 billion.
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