High-Yield Pipeline Stocks the Market Keeps Sleeping On

Most investors seem to be chasing the same energy infrastructure story right now. Surging power demand by AI data centers is fueling the need for more natural gas pipelines and power-generating facilities. That's causing the market to sleep on more crude-oil-focused names at a time when the oil market is experiencing its biggest supply disruption in decades due to the ongoing conflict in the Middle East.

As a result, investors may be missing out on potentially lucrative income streams. Here are three high-yield pipeline stocks you won't want to overlook if you want a big-time income stream.

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MPLX

MPLX (NYSE: MPLX) is a diversified master limited partnership (MLP; an entity that sends a Schedule K-1 Federal tax form) formed by refining giant Marathon Petroleum. It operates crude oil and petroleum products logistics assets to support Marathon's operations and those of other third-party customers. These assets generated nearly $2.3 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the midstream company during the first half of this year, about 65% of the total. The company also has a smaller natural gas and NGL services platform that accounts for the remaining 35% of its adjusted EBITDA.

The MLP's focus on crude oil and refined products leads to it being overlooked relative to other midstream companies. As a result, it has a lower valuation and higher distribution yield than its more gas-focused rivals (currently around 7.4%).

While MPLX currently makes most of its money providing crude oil and refined products logistics services, gas is its biggest growth driver. It's investing 90% of its organic growth capital on projects to meet growing gas and NGL infrastructure needs, including new gas processing plants, additional pipelines, and NGL fractionation and export facilities. These expansions support MPLX's growing distribution. It has increased its payout by a 12.5% in each of the past two years, and expects to continue growing it at that rate in 2026 and 2027.

Hess Midstream

Hess Midstream (NYSE: HESM) is a growth-oriented midstream company that owns oil, gas, and water-handling assets in the Williston Basin of North Dakota, one of the country's most prolific oil-producing regions. Its assets support its parent company, Chevron (which acquired its former parent, Hess, last year), as well as third-party customers.

The pipeline company currently yields 7.8%. It's targeting to grow that payout by around 5% annually through 2028. It has delivered dividend growth above that target since 2022.

Hess Midstream invested heavily to build out its infrastructure position in the Williston Basin, which is now paying dividends. It expects minimal capital investments going forward to support its customers' contracted volume growth over the next several years. That positions it to generate strong, growing cash flows, providing significant visibility into its dividend growth plan. Hess Midstream's strong financial position also enables it to return additional cash to investors through share repurchases.

Delek Logistics Partners

Delek Logistics Partners (NYSE: DKL) has the highest yield in this trio at 8%. It's very similar to MPLX as refiner Delek U.S. Holdings formed the company to support its infrastructure needs. Its operations currently span crude oil, refined products, natural gas, and water.

The MLP has been diversifying its operations to reduce its reliance on its parent. It now gets around 70% of its EBITDA from third-party customers, up from 41% in 2023.

One thing that investors won't want to miss about Delek is the consistency of its distribution growth. The MLP has increased its distribution for 54 consecutive quarters (more than 13 straight years). It has grown through a combination of organic expansions and acquisitions. It's currently nearing completion of the integrated sour gas processing, treating, and handling solution at its Libby Gas Complex to support growing customer demand. While it has a weaker financial position than others in the midstream sector, it's solid enough to provide the financial flexibility to continue investing in the expansion of its operations.

Interesting income options to consider

MPLX, Hess Midstream, and Delek Logistics Partners don't get as much attention as their more gas-focused peers. As a result, they currently trade at lower valuations and higher yields. However, the trade-off is that they might not grow as fast as others in the pipeline sector. That aside, they're interesting options for investors seeking some under-the-radar high-yield dividend stocks that could provide lucrative income streams.

Matt DiLallo has positions in Chevron. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Delek Us. The Motley Fool has a disclosure policy.