2 High-Yield Energy Stocks to Buy With $10,000 and Hold Forever

Published: Monday, July 28, 2025 at 10:30 am

High-Yield Energy Stocks Attract Investors as Interest Rates Shift

As interest rates potentially decline, income investors are expected to shift back towards high-yield stocks. While many energy stocks are cyclical, two midstream pipeline companies, Energy Transfer and Enterprise Products Partners, offer the potential for steady income.

Both companies operate as master limited partnerships (MLPs), offering tax advantages and paying out distributions instead of dividends. Energy Transfer and Enterprise transport natural gas, natural gas liquids, crude oil, and refined products through their extensive pipeline networks. Energy Transfer also has a retail fuel segment and exports NGL and LNG, while Enterprise focuses on NGL exports.

Energy Transfer and Enterprise are somewhat insulated from volatile commodity prices due to their toll-based business model. However, Energy Transfer's retail fuel segment is exposed to crude oil price fluctuations. Energy Transfer has pursued more aggressive expansion, leading to higher debt compared to Enterprise, which favors more conservative growth.

Energy Transfer's distributions per unit (DPU) decreased during the pandemic but have since recovered, with an increase in 2024. Enterprise has consistently increased its DPU over the past two decades. Both companies currently cover their distributions with distributable cash flow (DCF).

Analysts project Energy Transfer and Enterprise to grow their earnings per unit (EPU) at a compound annual growth rate (CAGR) of 9% and 5%, respectively, from 2024 to 2027. Energy Transfer's growth is expected to be driven by expansion in the Permian Basin, acquisitions, and its LNG export project. Enterprise's growth will be fueled by its Permian Basin processing plants and expansion plans. Both stocks are trading at relatively low multiples of their current year's EPU.

BNN's Perspective: While both companies present opportunities for income-focused investors, Enterprise's history of consistent distribution growth and more conservative approach may appeal to those seeking stability. Energy Transfer, with its higher growth potential, could be attractive to investors willing to accept more risk. Investors should carefully consider their risk tolerance and investment goals before making a decision.

Keywords: high-yield stocks, energy stocks, Energy Transfer, Enterprise Products Partners, MLPs, pipeline companies, distributions, dividends, income investors, interest rates, natural gas, crude oil, LNG, EPU, DCF, investment, portfolio

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