2 Energy Stocks That Can Stand the Test of Time

It can be challenging to invest in energy stocks, which often endure boom-and-bust cycles driven by volatile commodity prices. If you buy the wrong energy stock at the wrong point in that cycle, your investment can stay underwater for years before recovering.

However, midstream pipeline companies like Energy Transfer (NYSE: ET) and Enterprise Products Partners (NYSE: EPD) generally offer more stable returns and higher yields than conventional energy companies. Let's see why these two stocks might stand the test of time.

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What do Energy Transfer and Enterprise Products Partners do?

Energy Transfer and Enterprise Products both charge upstream extraction companies and downstream refining companies to transport natural gas, natural gas liquids (NGLs), crude oil, and other refined products through their pipelines. Both companies also help American companies export their natural gas products overseas.

That "toll road" model is resistant to volatile commodity prices, since it depends only on the consistent flow of those resources rather than their market value. Energy Transfer, which expanded with several bold acquisitions over the past few years, operates over 140,000 miles of pipeline across 44 states. Enterprise, which is generally more conservative with its investments and acquisitions, operates more than 50,000 miles of pipeline across 27 states.

How sustainable are their distributions?

Energy Transfer and Enterprise are both master limited partnerships (MLPs) that combine a return of capital with their own income to pay tax-efficient distributions in place of conventional dividends. Energy Transfer and Enterprise pay forward yields of 7% and 5.8%, respectively.

As long as their distributable cash flow (DCF) exceeds their total distributions, those high yields will remain sustainable. In 2025, Energy Transfer generated an annualized adjusted DCF of $8.2 billion, which easily covered its $4.6 billion in distributions. Enterprise Products generated a comparable "operational" DCF of $7.9 billion, compared to its $4.8 billion in distributions.

Why are they worth buying right now?

Energy Transfer and Enterprise Products are both expanding their pipelines across the Permian Basin and other regions. They probably won't outperform upstream or downstream companies when gas prices spike, but they'll generate stable long-term returns for their patient investors.

Energy Transfer and Enterprise Products both trade at about 13 times this year's earnings per unit (EPU). Their low valuations and high yields should limit their downside potential, while making them attractive safe-haven income investments if the market crashes. So if you're looking for a simple way to profit from the energy market, these two pipeline stocks fit the bill.

Leo Sun has positions in Energy Transfer. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.