4 Energy Stocks to Buy Now for Decades of Passive Income, Even at These Prices

The article highlights four midstream MLPs with attractive income profiles, led by Energy Transfer at a 7.2% yield and 8.5x forward EV/EBITDA, alongside Enterprise Products Partners, MPLX, and Western Midstream. It emphasizes strong distribution growth potential, low leverage, and favorable project pipelines, with AI-driven Permian gas demand cited as a key tailwind for Energy Transfer. The piece is broadly constructive on the sector, though it is primarily an opinion/stock-picking article rather than a company-specific catalyst.

Analysis

The market is still pricing midstream like a sleepy income trade, but the real setup is a capital-allocation rerating: leverage has come down enough across the group that incremental cash flow is shifting from de-risking to distribution growth and selective self-funded capex. That matters because once balance sheets are at or near target, the equity stops behaving like a bond proxy and starts compounding through payout growth plus multiple support, especially for names with visible project backlogs and fee-based exposure to Permian/Gulf Coast volumes.

The second-order winner is the infrastructure layer serving LNG, AI-driven power demand, and NGL export corridors. ET and MPLX are best positioned to capture that repricing because they have the most convex exposure to new molecule takeaway and processing demand, while WES has a more oil-linked earnings profile that makes it more cyclically levered to the next move in crude. EPD remains the lowest-drama compounding vehicle, but its relative valuation ceiling may stay capped unless the market rotates further into quality-duration income.

The main risk is that consensus is underestimating how quickly the “high yield” premium can compress if rates back up or commodity-linked volumes soften. These names look attractive on forward EV/EBITDA only if distribution growth stays intact; a 1-2 quarter pause in project in-service dates or weaker Delaware drilling could hit sentiment faster than fundamentals because investors are implicitly paying for visible growth, not just current cash yield. On the other hand, if AI power demand and Gulf Coast NGL exports continue to tighten takeaway capacity, the sector can re-rate without needing higher oil prices.

Contrarian take: the better trade is not simply long the highest yield, but long the names where capex discipline is turning into faster payout growth and higher ROIC. ET is the cleanest expression of that, while WES is the most vulnerable to a reversal if production activity slows. The article’s bullishness is sensible, but it likely understates how much of the upside is already in the yield screen; the real alpha comes from identifying which balance sheets can convert cheap valuation into sustained distribution acceleration over the next 12-24 months.

Key Decisions for Investors

• Long ET vs. EPD in a 6-12 month pair trade: ET offers more operating leverage to project growth and a lower valuation, while EPD is the defensive quality leg; target is multiple catch-up on ET with limited downside if midstream stays bid.
• Initiate a barbell long basket of ET and MPLX for a 12-month horizon; both have the strongest mix of yield plus growth, with upside if AI-related gas demand extends takeaway bottlenecks and forces higher asset valuations.
• Short WES on any strength if Delaware drilling indicators soften over the next 1-2 quarters; this is the most oil-sensitive name in the group and should underperform in a weaker production tape.
• Use pullbacks to add EPD as a lower-volatility compounding core for 18-24 months; risk/reward is less about near-term upside and more about preserving capital while collecting a growing payout.
• If rates remain elevated for another quarter, hedge the group with a short duration-tilted rate-sensitive basket rather than energy beta; the key risk is valuation compression, not immediate earnings deterioration.