The Smartest High-Dividend Energy Stocks to Buy With $1,000 Right Now

The article identifies Energy Transfer (ET), Enterprise Products Partners (EPD), and MPLX as attractive high-yield midstream energy stocks for income-seeking investors, highlighting their strong balance sheets and growth opportunities. Energy Transfer, yielding 7.3%, is expanding growth capex due to increased natural gas demand. Enterprise Products Partners, yielding 6.6%, has increased its distribution for 26 years and is also increasing growth capex spending. MPLX, yielding 7.4%, is growing its distribution and expanding its natural gas and NGL services through increased capex and acquisitions.

Analysis

The midstream energy sector currently presents compelling opportunities for income-seeking investors, with several companies offering high yields, improved balance sheets, and identifiable growth prospects, although inherent risks related to commodity price sensitivity and capital intensity persist. Energy Transfer (ET) stands out with a 7.3% yield and a relatively low forward EV/EBITDA multiple of 8.1 times, significantly below the 2011-2016 MLP average of 13.7x. Despite a pandemic-era distribution cut, ET has since strengthened its balance sheet to a historically robust position, increased its distribution above pre-cut levels, and benefits from a high percentage of take-or-pay contracts; the company is ramping up growth capex from $3 billion last year to $5 billion this year, primarily targeting natural gas opportunities expected to materialize late this year or next. Enterprise Products Partners (EPD), yielding 6.6%, exemplifies consistency with 26 consecutive years of distribution increases, supported by a largely fee-based business model, take-or-pay provisions, and a strong balance sheet. EPD is also increasing its growth capex, planning to spend $4 billion to $4.5 billion this year, up from $3.9 billion a year ago, with $6 billion in projects anticipated online this year; its forward EV/EBITDA of 10 times reflects a premium for this consistency but remains below historical norms. MPLX (MPLX) offers a 7.4% yield and boasts a strong balance sheet with 3.3 times leverage and a 1.5 times distribution coverage ratio, having grown its distribution by 10% or more annually for the past three years, including a 12.5% increase in 2024. MPLX's crude operations are supported by its parent, Marathon Petroleum, while growth is focused on its natural gas and NGL segments, with capex increasing from $889 million in 2024 to $1.7 billion this year and strategic acquisitions like the BANGL pipeline bolstering its Permian position; its forward EV/EBITDA of 10.3 times is considered reasonable, with continued double-digit distribution increases anticipated. Collectively, the sector shows signs of recovering growth and is reported to be in its best financial shape, yet pipeline companies remain exposed to potential volume reductions or contract renegotiations from sustained low energy prices and carry debt due to their capital-intensive nature.

Key Decisions for Investors

• Investors seeking high yields could consider accumulating positions in midstream energy stocks like ET, EPD, and MPLX, given their current distribution levels and generally improved financial health, while acknowledging the sector's inherent capital intensity and sensitivity to energy market fluctuations.
• Energy Transfer (ET) may appeal to value-oriented income investors due to its 7.3% yield and low 8.1x EV/EBITDA multiple, coupled with a significant capex program aimed at natural gas-driven growth, though its past leverage issues warrant consideration despite current balance sheet strength.
• Enterprise Products Partners (EPD) is a suitable option for investors prioritizing consistent distribution growth and balance sheet stability, as evidenced by its 26-year track record, even with a comparatively higher 10x EV/EBITDA multiple and a 6.6% yield.