High-Yield Pipeline Stocks: Energy Transfer Growth vs Enterprise Products Stability in 2026

The two largest midstream players are charting distinctly different paths into 2026. Energy Transfer is aggressively funding growth, while Enterprise Products is prioritizing balance sheet strength and returning capital through buybacks.

Energy Transfer remains focused squarely on expansion. The company plans to invest $5 billion in capital expenditures in 2026, targeting specific infrastructure projects, like a major pipeline, aiming to fuel its 3-5% annual distribution growth target. This growth strategy is underpinned by an attractive 8% dividend yield, making it the higher-yield, distribution growth-oriented partner. However, this active capex cycle inherently limits near-term flexibility compared to its competitor.

Enterprise Products Partners, having progressed past its major project build-out phase, forecasts a shift towards stronger free cash flow generation in 2026 as capital spending declines. This improved cash flow is expected to be directed towards share repurchases and strategic acquisitions, leveraging its robust financial position, including a 3.3x leverage ratio and an A- credit rating. While this signals stability and disciplined capital allocation, it translates to a more measured approach to overt distribution hikes, with buybacks becoming the primary tool for enhancing shareholder value.

Both companies are exposed to midstream sector risks like commodity price volatility and regulatory challenges. Energy Transfer's growth trajectory carries execution risk associated with completing its capex projects on time and within budget. Enterprise Products benefits from greater financial resilience but operates at a premium valuation compared to Energy Transfer. Investors seeking growth and yield should note Energy Transfer's strategy, while those prioritizing balance sheet strength and capital return flexibility may favor Enterprise Products' setup heading into 2026.

Infrastructure Expansion and Demand Capture

Enterprise Products Partners is aggressively scaling its export muscle.

The company is adding 300,000 barrels per day (BPD) of propane, butane, and propylene export capacity at its Houston Ship Channel facility, targeting completion by late 2026. This major expansion, part of their established 2024-2026 capital program, directly taps into the surging global demand for liquefied natural gas (LNG). Simultaneously, the Neches River Terminal (NRT) expansion unfolds in two critical phases: Phase 1 starts in late 2025, adding 120,000 BPD of ethane capacity, while Phase 2 begins in early 2026, capable of handling either 180,000 BPD of ethane or 360,000 BPD of propane.

In contrast, Energy Transfer is locking in demand from an entirely different powerhouse: artificial intelligence and data centers. The partnership secured a 0.44 billion cubic feet per day (bcf/d) supply agreement specifically for this energy-hungry sector, commencing in 2026. This strategic move complements the broader midstream sector's projected 25%-34% growth by 2030, driven significantly by these new technological demands. Both companies exemplify distinct demand capture tactics: Enterprise focuses on physical export infrastructure to serve global LNG markets, while Energy Transfer secures direct offtake agreements for domestic data center consumption.

While these projects position midstream players favorably for significant demand growth, they face inherent execution risks. Regulatory approvals for large-scale infrastructure like the NRT phases can introduce delays and cost overruns, potentially impacting the late 2026 timeline. Furthermore, the data center market, though booming, remains highly competitive. Energy Transfer's 0.44 bcf/d deal is a substantial capture, but securing similar agreements against rivals requires ongoing negotiation and potentially lower margins if competition intensifies. The sector's improved projected return on invested capital (ROIC) of 12.7% in 2026 reflects confidence in these strategies, yet successful delivery hinges on navigating these practical frictions.

Balance Sheet Strength and Risk Buffers

Enterprise Products Partners stands on a significantly firmer financial footing than peer Energy Transfer. Its 3.3x net debt-to-EBITDA leverage ratio and investment-grade A- credit rating provide a clear buffer against sector headwinds. This strength enables a focus on free cash flow generation after 2025 and strategic flexibility for acquisitions or share buybacks.

Energy Transfer, conversely, prioritizes aggressive growth, committing substantial capital despite facing the same midstream sector challenges as Enterprise. Both companies contend with persistent risks from oil price volatility and production delays that can impact throughput volumes and cash flows.

While Energy Transfer's higher yield appeals to income seekers, Enterprise's disciplined capital allocation and superior leverage position it for greater stability during market turbulence. Long-term demand for natural gas liquids and power infrastructure, however, provides a foundational support for both businesses over time. The key distinction lies in Enterprise's capacity to absorb shocks without compromising its financial priorities, whereas Energy Transfer's growth trajectory demands continuous capital deployment, increasing sensitivity to market fluctuations.

Valuation and Entry Point Opportunity

Midstream stocks now offer historically attractive valuations, with forward EV/EBITDA multiples significantly below both 10-year averages and the peaks seen in 2013. This sector-wide discount creates compelling entry points, though valuations diverge sharply between peer companies. Energy Transfer trades at a forward EV/EBITDA of 7.6x, notably lower than Enterprise Products Partners' 9.7x multiple. This gap reflects their contrasting strategies: Energy Transfer is aggressively reinvesting $10 billion through 2026 in AI-related infrastructure and new pipelines targeting Texas, Arizona, and New Mexico markets, accepting near-term valuation compression for future growth. Its 8% yield and planned 3-5% annual distribution increases compensate income-focused investors. Enterprise commands the premium partly due to its conservative leverage (3.3x) and dominant fee-based revenue structure (80%+ of earnings), generating strong free cash flow expected to rise in 2026 as capital spending declines.

Both companies trade at discounts to their March 2025 levels, reflecting broader MLP weakness since April 2025. AMZI and AMEI ETFs tracking MLPs are approximately 0.5x and 0.3x lower than in March, underscoring sector-wide pressure. While Energy Transfer's growth focus justifies some multiple compression, Enterprise's stability and cash flow predictability support its higher valuation. These discounts, combined with stable long-term EBITDA expectations, present clear entry opportunities, though the MLP segment continues to underperform versus C-Corp peers like Enterprise amid persistent structural headwinds. Investors should weigh Energy Transfer's growth potential against its higher capex intensity versus Enterprise's defensive profile and cash generation strength.