Energy's Main Character: Which Midstream Stock is Riding the Yield Wave?

The market's attention is shifting. While oil prices are forecast to fall, search interest is moving from the volatile commodity itself to the stable yields it can generate. This creates a clear catalyst for a specific group of energy stocks.

The forecast sets the stage. Global Brent crude is expected to average $56 per barrel in 2026, a 19% drop from 2025. This projected decline in oil prices is a direct signal to the market: the speculative search interest that often surges with high oil prices is likely to cool. In its place, the focus is turning to yield and stability.

This is where midstream companies become the main character. Their fee-based business model provides a crucial buffer. Unlike upstream producers whose profits swing with the oil price, midstream firms charge customers for moving oil and gas through their pipelines and storage. As one analysis notes, the volume moving through the system is more important than the price of the commodities being moved. This makes them inherently less volatile and more predictable.

The result is a clear trend. Search volume is increasingly focused on high-yield, stable income. This is why stocks like Enbridge, with a forward dividend yield of 5.6%, and Enterprise Products Partners, with a yield coming in at 6.3%, are being highlighted as prime options. They represent the boring, fee-generating infrastructure that thrives when oil prices are low and demand for energy transport remains steady. In a market looking past oil's volatility, these midstream giants are positioned to benefit.

The Main Beneficiary: Enterprise Products Partners (EPD)

Enterprise Products Partners stands out as the clear frontrunner among high-yield energy plays. Its entire business model is built for the current market setup: owning critical pipeline infrastructure and charging fees for use. This fee-based structure is the core of its appeal. As the evidence notes, the volume moving through the system is more important than the price of the commodities being moved. In a world where oil prices are forecast to fall, that insulation from commodity volatility is a major advantage. The company's cash flows are tied to energy demand, which remains high, not to the price of oil.

Financially, EPD delivers on the promise of stability and income. It boasts a dividend yield of 6.66%, a figure that has attracted investors seeking reliable returns. More importantly, it has a proven track record of growing that income. The company has grown its dividend for 28 consecutive years, with an average annual increase of 3.40% over the past five years. This consistent growth is a powerful signal of financial health and management discipline, making it a favorite for dividend-focused investors.

The near-term catalyst is straightforward and immediate. The next quarterly dividend payment of $0.55 per share is scheduled for Friday, February 13. For investors, this isn't just a future promise; it's a tangible event that underscores the stock's current yield. In a market searching for yield amid oil's decline, EPD's combination of a high, growing payout and a business model that thrives on steady volumes makes it the main beneficiary of this trend.

Catalysts and Risks: What to Watch

The investment case for midstream stocks like Enterprise Products Partners is clear: they are the stable, fee-generating infrastructure that thrives when oil prices are low. The primary catalyst is the market's own search for yield, a trend that favors these high-dividend, low-volatility names. For EPD, the immediate catalyst is its scheduled dividend payment, a tangible event that underscores its current income promise.

Valuation supports the thesis. With a forward yield of 6.66%, EPD offers a compelling return in a low-growth environment. Its track record of 28 consecutive years of dividend growth signals financial strength and management confidence. This contrasts with other contenders. Enbridge (ENB) offers a solid forward dividend yield of 5.6% and a longer growth streak, but faces headwinds like a recent JPMorgan downgrade citing sluggish growth in its crude oil business. Energy Transfer (ET) provides a higher yield, but its dividend cover is thinner, with coverage estimated at approximately 1.5. EPD's combination of yield, growth, and a more robust payout ratio makes it the most balanced option.

The main risk to the entire midstream thesis is headline-driven volatility from upstream oil production. While the fee-based model provides a significant buffer, it is not a perfect shield. The critical watchpoint is any slowdown in U.S. crude production growth. The latest forecast shows U.S. crude oil production will decrease in the forecast, declining by less than 1% in 2026. This projected decline, driven by lower prices, is a double-edged sword. It reduces the commodity price risk that hurts upstream players, but it also means less crude moving through pipelines. A sharper-than-expected drop in U.S. output could eventually pressure pipeline utilization rates and, consequently, fee revenues.

In practice, this means the midstream story is about volume, not price. The business model is built for stability, but its success hinges on the underlying energy demand that keeps the oil flowing. For now, the trend is clear: as the market searches for yield amid oil's decline, EPD is positioned to be the main beneficiary. Yet investors must monitor the pipeline traffic, because the fee structure only works if there's something to move.