From Yahoo Finance: 2025-06-21 04:40:00

Energy Transfer and Enterprise Products Partners are top high-yield midstream stocks for investors. Enterprise is the safer choice with a strong record, while Energy Transfer offers more potential upside. Energy Transfer has a 7.2% yield, while Enterprise sits at 6.8%. Both are structured as master limited partnerships (MLPs) with significant operations in the U.S., especially in the Permian Basin and along the Gulf Coast.

Energy Transfer has more geographic breadth, while Enterprise is more concentrated in Texas and the Gulf Coast. Energy Transfer operates one of the largest natural gas pipeline systems, while Enterprise dominates in natural gas liquids (NGLs). Both companies focus on fee-based activities to protect cash flows, with Energy Transfer being more aggressive in pursuing growth projects.

Enterprise is historically more conservative, maintaining low leverage and increasing distributions for 26 years. Energy Transfer had to cut its distribution during the pandemic but quickly recovered. Both companies are seeing strong growth project demand, with Enterprise planning to spend $4-4.5 billion this year, and Energy Transfer increasing its growth capex budget to $5 billion.

Energy Transfer is the cheaper stock with a higher yield, trading at a lower EV-to-EBITDA multiple compared to Enterprise. Both companies are expected to grow their distribution in the 3-5% range. While Enterprise is the safer stock, Energy Transfer offers more growth opportunities and upside potential.

Geoffrey Seiler has positions in both Energy Transfer and Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners.



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