2 Midstream Dividend Stocks With Growing Payouts -- One Yielding Over 6%

Energy Transfer offers a 6.4% distribution yield and plans 3%-5% annual distribution growth while investing up to $5.9B in growth projects, including Permian gas takeaway pipelines tied to AI data-center power demand. Its targeted project returns imply 5x-6x EBITDA build multiples, while fee-based operations account for about 90% of business and distributable-cash-flow coverage was 2.2x last quarter. Enterprise Products Partners yields 5.8%, has raised distributions for 28 consecutive years, and expects double-digit EBITDA and distributable-cash-flow growth in 2027 as $6.5B of projects under construction ramp up.

Analysis

The market is likely to over-attribute near-term AI power demand to pipeline cash flows. Data-center load growth can tighten regional gas and power markets quickly, but incremental interstate transport revenue generally requires signed capacity, permitting, and commissioning; the economic payoff is more plausibly a 12-36 month issue than a next-quarter earnings driver. ET has greater upside torque if Permian egress remains constrained, whereas WMB offers a cleaner gas-demand exposure with less dependence on Permian basin differentials.

ET's project-led growth can support distribution growth only if construction costs and in-service dates remain controlled; its fee base reduces commodity sensitivity but does not eliminate volume, recontracting, and counterparty exposure. EPD is structurally more defensive, but its NGL thesis depends primarily on sustained liquids-rich drilling and export economics, not simply gas burn from power plants. A weaker crude-price environment could reduce associated-gas/NGL supply, lowering fractionation and export volumes even if power-sector gas demand rises.

The non-obvious risk is that AI-driven load forecasts accelerate utility procurement of nuclear, renewables-plus-storage, and grid upgrades before new gas generation is built, leaving midstream multiples ahead of cash-flow realization. Conversely, persistent power shortages or higher gas-basis volatility would make contracted transport capacity materially more valuable and could drive a rerating across ET, WMB, and KMI. The key falsifiers are project cost revisions, in-service delays, lower contracted-capacity disclosures, and a sustained decline in Permian drilling activity.

Key Decisions for Investors

• Initiate a 3-6 month relative-value position: long ET / short EPD in equal dollar amounts only if ET's next project update reaffirms commissioning schedules and contracted volumes. ET has more upside to a gas-infrastructure rerating, while EPD faces nearer-term normalization risk; exit if ET reports material cost inflation, delays, or weaker coverage.
• For lower-volatility exposure, accumulate EPD on weakness over a 6-18 month horizon rather than chase AI headlines. The underwriting catalyst is project ramp and restoration of growth after transitional contract/spread headwinds; reassess if NGL export volumes or petrochemical margins weaken materially.
• Add WMB to the watchlist as a potentially purer beneficiary of incremental gas-fired power demand than either MLP. Buy only after evidence of new long-haul capacity commitments tied to utility or data-center load, rather than relying on announced AI capex alone.
• Monitor Permian rig counts, Waha basis, and quarterly disclosed backlog conversion. A sustained compression in basis differentials combined with falling Permian activity would weaken ET's incremental-volume case and is a signal to reduce the ET-over-EPD trade.