Midstream energy stocks are the companies involved in the processing, transportation, and storage of crude oil, natural gas, and natural gas liquids. These companies operate in the “midstream” sector, which falls between the upstream (exploration and production) and downstream (refining and marketing) sectors of the energy industry. They are far less susceptible to spot benchmark pricing moves, as most sector leaders have locked in contracts for their services, some of which run for years. We decided to screen the sector for the highest-yielding companies that make sense for growth and income investors seeking to generate dependable passive income.
One of the best ideas for investors seeking to diversify their portfolios with energy exposure at current pricing is master limited partnerships, or MLPs. They pay substantial and dependable dividends, and many energy master limited partnerships are midstream companies that control the movement or storage of oil and natural gas through contract pricing with major oil producers.
We screened our 24/7 Wall Street midstream MLP research database, looking for top companies that pay ultra-yielding high distributions to their shareholders. Four top companies hit our screens, and all are poised to pay shareholders incredible and dependable distributions every 90 days.
Why do we cover energy MLPs?
Energy MLPs can be an attractive investment due to their unique structure and market position. MLPs, primarily involved in energy infrastructure like pipelines and storage, offer investors high-yield distributions, often paying out 5% to 8% annually, as they are required to distribute most of their cash flow to unitholders. This provides a steady income stream, appealing to income-focused investors. Additionally, MLPs benefit from stable, fee-based revenues tied to energy transportation, rather than commodity price volatility, which reduces risk in turbulent markets.
Cross America Partners
While somewhat different from its peers in the industry, this company has experienced substantial growth this year and anticipates similar growth in 2026. Cross America Partners L.P. (NYSE: CAPL) is a wholesale distributor of motor fuels, a convenience store operator, and owner and lessee of real estate used in the retail distribution of motor fuels.
The company operates through two segments:
- The Wholesale segment includes the wholesale distribution of motor fuel to lessee dealers and independent dealers.
- The Retail segment includes the retail sale of motor fuel at retail sites operated by commission agents, the sale of convenience merchandise items, and the retail sale of motor fuel at company-operated sites.
The company distributes motor fuel on a wholesale basis to approximately 1,600 sites located in 34 states.
Cross America Partners owns or leases approximately 1,100 sites, of which it operates 365 as company-operated sites. It delivers branded motor fuel under these familiar names to its customers:
- Exxon Mobil
- BP
- Shell
- Valero
- Marathon
- Phillips 66
Plains All American Pipeline
This stock has been locked in a tight trading range, looks ready to break out, and pays a huge dividend. Plains All American Pipeline L.P. (NYSE: PAA | PAA Price Prediction) engages in the pipeline transportation, terminalling, storage, and gathering of crude oil and natural gas liquids (NGLs) in the United States and Canada.
The company operates in two segments. The Crude Oil segment offers:
- Gathering and transporting crude oil through pipelines
- Gathering systems
- Trucks, barges, or railcars
- Terminalling, storage, and other facilities-related services and merchant activities
The Natural Gas Liquids segment provides:
- Gathering
- Fractionation
- Storage
- Transportation
- Terminalling activities
- Ethane, propane, normal butane, iso-butane, natural gasoline, and crude oil refining processes
USA Compression Partners
USA Compression Partners L.P. (NYSE: USAC) provides natural gas compression services under term customer contracts. While perhaps less known than its peers, this top company pays shareholders one of the most significant dividends in the industry.
The company offers compression services to:
- Oil companies and independent producers
- Processors
- Gatherers
- Transporters of natural gas and crude oil, as well as operating stations
USA Compression Partners primarily provides natural gas compression services to infrastructure applications, including centralized natural gas gathering systems, processing facilities, and gas lift applications for crude oil wells.
Western Midstream Partners
While somewhat off the radar, this is the highest-yielding stock in this group and offers an outstanding entry point. Western Midstream Partners L.P. (NYSE: WES) acquires, owns, develops, and operates midstream assets.
The company is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas, as well as gathering, stabilizing, and transporting condensate, NGLs, and crude oil. Additionally, the company collects and disposes of produced water.
The midstream assets are located in:
- Texas
- New Mexico
- Colorado
- Utah
- Wyoming
In addition, as a natural gas processor, the company also buys and sells natural gas, NGLs, and condensate on its own behalf and as an agent for its customers under specific contracts. The company’s subsidiaries include:
- Western Midstream Operating GP
- Western Midstream Services
- Western Midstream Services Holdings
- Western Midstream Operating
Consider This Exchange-Traded Fund (ETF)
Those looking to avoid the pesky K-1s can always purchase shares in the ALPS Alerian MLP ETF (NYSE: AMLP), which pays a substantial 7.67% dividend. Investors receive a 1099 instead of a K-1.
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