2 Energy Stocks to Consider Instead of Crude Oil
Key Points
Enterprise Products Partners and Enbridge are two of the largest midstream operators in North America.
Both Enterprise and Enbridge have increased their dividends for decades.
- 10 stocks we like better than Enterprise Products Partners ›
The geopolitical conflict in the Middle East has oil prices back in the headlines. Energy markets are in a state of flux, commodity prices are on the rise, and you are likely already seeing the impact at the gas pump. Even after the conflict ends, it will take some time for oil markets to stabilize again. Enterprise Products Partners (NYSE: EPD) and Enbridge (NYSE: ENB) are a way to sidestep oil prices while still investing in the energy sector. Here's what you need to know.
Enterprise and Enbridge instead of crude oil
Enterprise and Enbridge operate in the midstream segment of the energy sector. They own the energy infrastructure, such as pipelines, that helps to move oil and natural gas around the world. This is a toll-taker business, with the companies charging fees for the use of their assets. The volume of energy flowing through their systems is more important than the price of the commodities they are moving.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
This changes the equation for investors in a big way, with both Enterprise and Enbridge being reliable cash flow generators even when oil prices are weak. The best examples of the business model's reliability are Enterprise's 27 consecutive distribution increases and Enbridge's 31 annual dividend hikes (in Canadian dollars).
Enterprise and Enbridge are fairly boring businesses, but they are highly reliable. Dividend investors interested in energy stocks will particularly appreciate them, given Enterprise's 5.8% distribution yield and Enbridge's dividend 5.2% yield.
Which one should you buy?
That said, they aren't interchangeable. Enterprise is a master limited partnership (MLP), which means it comes with material tax complications. Enbridge, meanwhile, isn't a pure play midstream business. It also owns regulated natural gas utilities and has a small clean energy business. That diversification may be attractive to some investors, while turning others off.
Still, the bigger takeaway is that you can invest in the energy sector without taking on the excessive commodity exposure you would if you bought an oil driller. Reliable income stocks like Enterprise and Enbridge may look boring right now, when oil prices are flying high, but history shows that oil prices will eventually fall. When that happens, Enterprise and Enbridge will likely look very attractive again.
Buy Enterprise and/or Enbridge now, and you can collect an attractive income stream from the energy sector while you wait for Wall Street to be reminded (yet again) that what goes up also comes back down.
Should you buy stock in Enterprise Products Partners right now?
Before you buy stock in Enterprise Products Partners, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Enterprise Products Partners wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $514,000!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,105,029!*
Now, it’s worth noting Stock Advisor’s total average return is 930% — a market-crushing outperformance compared to 187% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of March 16, 2026.
Reuben Gregg Brewer has positions in Enbridge. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.
Recommended Articles
