The Best High-Yield Midstream Stock to Invest $100 in Right Now

In today's volatile energy market, investors are seeking stable, high-yielding investments. Midstream energy stocks, which focus on the transportation, storage, and processing of energy products, offer an attractive combination of steady income and growth potential. One standout option is enterprise products partners L.P. (EPD), a master limited partnership (MLP) with a strong track record and compelling fundamentals.



EPD boasts an impressive 6.3% distribution yield, which is multiples higher than the S&P 500 index yield of 1.2%. This high yield is supported by a solid track record of annual distribution increases, with the company having raised its distribution for 26 consecutive years. In 2024, EPD increased its distribution by 5%, outpacing the historical rate of inflation growth.



EPD's strong distributable cash flow coverage of 1.7x provides a safety net for its distribution, leaving plenty of room for adversity before a distribution cut would be in the cards. This conservative approach is further bolstered by EPD's industry-leading, low leverage metrics, ensuring the company's financial stability and long-term growth prospects.

EPD's business model is well-positioned to benefit from the growing demand for natural gas, the fastest-growing fossil fuel. As the U.S. continues to rely on fossil fuels for 79% of its energy needs, natural gas is expected to remain the dominant energy source for decades to come. EPD's extensive portfolio of energy infrastructure assets, including pipelines, storage, processing, and transportation assets, generates reliable, fee-based cash flow, making it less sensitive to commodity price fluctuations.



EPD is slated for slow and steady growth, with $7.6 billion of major growth capital projects under construction. These projects will go into service over the next three years, supporting future distribution growth. The company's strong distributable cash flow coverage and conservative approach to debt management ensure that it has the capital to support these growth investments, as well as acquisitions and unit buybacks.

While EPD may not offer rapid income growth, its high distribution yield and solid distribution growth prospects make it an attractive option for income-oriented investors. The company's conservative approach to debt management and strong distributable cash flow coverage provide a safety net for its distribution, ensuring that investors can rely on a steady stream of income.

In conclusion, Enterprise Products Partners L.P. (EPD) is the best high-yield midstream stock to invest $100 in right now. Its high distribution yield, strong distribution growth, solid cash flow coverage, and conservative approach to debt management make it an attractive option for income-oriented investors seeking steady income and growth potential. As the U.S. continues to rely on fossil fuels and natural gas demand grows, EPD's extensive portfolio of energy infrastructure assets positions it well to benefit from these trends and deliver long-term value to investors.