4 Energy Stocks to Buy Now for Decades of Passive Income, Even at These Prices

If you're looking for high-yield stocks that can give you decades of solidly growing passive income, the midstream energy space is still one of the best places to look. These master limited partnership (MLP) pipeline stocks essentially act like energy toll rolls, generating highly predictable, robust cash flow that they pay out to stockholders in the form of distributions.

While they can come with a little extra paperwork come tax time, they also have the added benefit of a large percentage of these distributions often being tax-deferred. While the sector has gotten a boost along with other energy stocks over the war with Iran, MLPs are still trading at historically attractive valuations and have solid growth prospects. Between 2011 and 2016, the sector traded at an average of 13.7 times on an enterprise value (EV)-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio, while today they generally trade at 11 times or below.

Let's look at four midstream MLPs that can provide you with decades of passive income.

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1. Energy Transfer: 7.2% yield and 8.5x forward EV/EBITDA

Despite having one of the cheapest valuations in the midstream space, Energy Transfer (NYSE: ET) also has some of the best growth prospects due to its strong presence in the Permian Basin. The Permian is one of the cheapest sources of natural gas in the U.S., and Energy Transfer is seeing strong project demand related to the artificial intelligence (AI) infrastructure build-out due to its massive pipeline network and access to Permian gas.

Energy Transfer has brought its leverage ratio to the low end of its targeted 4 to 4.5 range, allowing it to more aggressively pursue attractive projects it expects will deliver mid-teens returns. Meanwhile, it plans to grow its distribution at a 3% to 5% annual pace moving forward.

2. Enterprise Products Partners: 5.9% yield and 11x forward EV/EBITDA

While it has one of the lower yields in the MLP space and its valuation is toward the high end of the group, Enterprise Products Partners (NYSE: EPD) is still the gold standard. The company has a strong reputation as a shareholder-friendly company and has raised its distribution for 27 straight years.

Enterprise has a strong balance sheet with just 3.3x leverage and is pulling back on growth capital expenditures this year, which will give it some good capital allocation flexibility. Meanwhile, with a number of projects set to come online toward the end of the year, it is projected to have strong double-digit cash flow and EBITDA growth for 2027.

3. MPLX: 7.8% yield and 11x forward EV/EBITDA

MPLX (NYSE: MPLX) has been busy upgrading its assets through a series of acquisitions and divestitures, as it turns more of its focus toward the Permian and Gulf Coast. It also has a number of attractive natural gas and natural gas liquid (NGL)-related growth projects in these regions, while its crude operations are backed by its parent, refinery Marathon Petroleum.

Despite its high yield, MPLX has been growing its distribution at a robust pace. It's increased its payout by 12.5% each of the past two years and plans to increase its distribution at a similar pace over the next two years. Meanwhile, it has a solid balance sheet, with just 3.7x leverage at the end of 2025, and had a 1.3 times distribution coverage ratio.

4. Western Midstream: 9% yield and 9.3x forward EV/EBITDA

Western Midstream (NYSE: WES) has the highest yield of the lot and is targeting a distribution of about 3% this year. The company could also benefit from higher oil prices, and it was starting to see customers in the Delaware Basin adjust their drilling activities due to low prices. The company has been leaning into the produced water business through its acquisition of Aris Water Solutions and Pathfinder Pipeline project, so it has a bit more ties to oil production than the above three stocks.

The company has low leverage of just 3.2x, and recently restructured its deal with parent Occidental Petroleum to move from a cost-of-service structure to a fixed-fee structure in exchange for 15.3 million units (shares) of Western, worth around $610 million. The company believes it can reduce costs so that the new structure will have a neutral impact on it, while it has also expanded an agreement with ConocoPhillips in the Delaware.

A great time to buy

This is still a great time to buy MLPs. While Energy Transfer is my favorite given its valuation and growth prospects, all four look like solid stocks you can add to your portfolio.

Geoffrey Seiler has positions in Energy Transfer, Enterprise Products Partners, and Western Midstream Partners. The Motley Fool recommends ConocoPhillips, Enterprise Products Partners, and Occidental Petroleum. The Motley Fool has a disclosure policy.