For those seeking decades of passive income, stocks in the energy midstream sector are an ideal choice. Several Master Limited Partnerships (MLPs) in the industry are exempt from corporate taxes but are required to distribute most of their cash flow to shareholders in the form of dividends. Although MLPs involve some additional paperwork when filing taxes, their dividends offer the advantage of tax deferral, with taxes only due when the shares are sold. Here are three high-quality midstream stocks worth buying that can provide you with passive income for the next decade.
Energy Transfer (ET) currently offers a dividend yield as high as 7.1% and plans to gradually increase distributions by 3% to 5% in the future. The company operates one of the largest midstream networks in the United States, with the majority of its revenue coming from fee-based businesses, providing strong visibility into its cash flow. During the pandemic, the company was forced to cut dividends due to excessive debt but quickly improved its balance sheet and restored dividends to pre-cut levels, with current distributions far exceeding the past. As the demand for natural gas grows, driven by consumption from AI data centers, Energy Transfer has re-entered growth mode, undertaking numerous growth projects related to natural gas demand. With its low stock valuation, ample dividend coverage (with a coverage ratio of nearly 1.8x last quarter), and a robust growth pipeline, Energy Transfer is a stock worth buying and holding to generate substantial passive income over the next decade and beyond.
As one of the most stable companies in the midstream sector, Enterprise Products Partners (EPD) has increased its dividends for 27 consecutive years. Considering the multiple energy market collapses and periods of economic hardship during this time, this track record is impressive and fully demonstrates the company’s consistent conservatism and reliability. The stock currently has a dividend yield of 5.9%, with an annual dividend growth rate of approximately 3% to 4%. The company boasts one of the best balance sheets in the industry, with a dividend coverage ratio of 1.8x last quarter. At the same time, the company has reduced its 2026 capital expenditure budget to $2.5–2.9 billion, down from $4.4 billion in 2025, and is expected to have ample cash this year. Several growth projects are also set to become operational later this year, and the company forecasts double-digit growth in adjusted EBITDA and cash flow for 2027. Overall, Enterprise Products Partners is a reliable high-yield stock that will achieve steady growth in the coming years.
Western Midstream (WES) offers one of the highest yields in the midstream sector, with a dividend yield of 8.6%. The company plans to increase its dividends by 3% in 2026. Although Western Midstream performed strongly in 2025, growth is expected to slow this year, primarily due to an anticipated decline in system throughput and the recent renegotiation of agreements with its parent company, Occidental (OXY), which shifted the service cost structure to a fixed-fee model. Additionally, Western Midstream has expanded its partnership with ConocoPhillips in the Delaware Basin to further reduce its reliance on Occidental. Through the acquisition of Aris Water Solutions and the Pathfinder Pipeline project, Western Midstream is fully committed to expanding its produced water handling business. As a result, even during this transitional period, the company’s adjusted EBITDA is still expected to grow this year. With one of the best balance sheets in the industry and the company lowering expectations, now is a good time to add this high-yield stock to your portfolio.
