Earn Potentially $4,700 in Passive Income; Invest $25,000 in Each of These 3 Midstream Energy Companies.
Investing in pipelines, similar to using toll roads, can lead to a consistent income stream. After all, who wouldn't want a piece of a money-making asset like that? Luckily, you can own a share of such assets through midstream energy stocks. If your goal is to generate over $4,700 in passive income this year, consider investing $25,000 in each of these three promising picks:
1. Enbridge
Enbridge, the largest midstream energy company by market cap, operates pipelines spanning North America, totaling 54,000 miles of natural gas and natural gas liquids. Thanks to strategic acquisitions in 2023, Enbridge is now the largest natural gas utility in North America. It's also expanding its presence in the renewable energy market. With a forward dividend yield of 6%, an initial investment of $25,000 in Enbridge could generate $1,500 in passive income this year, and its consistently growing dividend (30 years in a row) could lead to even more passively earned income in the future. Enbridge delivered impressive growth over the past 12 months, with a gain of around 25%. The steadily increasing natural gas demand and data centers' high power requirements could contribute to maintaining Enbridge's winning ways.
2. Energy Transfer
Energy Transfer, with over 130,000 miles of pipelines across the U.S., transports crude oil, natural gas, and natural gas liquids, and operates processing facilities, storage facilities, and terminals. Acquisitions, such as Lotus Midstream, Crestwood Equity Partners, and WTG in 2023 and 2024, have significantly contributed to Energy Transfer's growth. As a limited partnership (LP), Energy Transfer pays distributions to unitholders instead of dividends to shareholders, providing a high 6.51% forward yield, which translates to about $1,628 in income from an initial investment of $25,000, with a growth expectation of 3% to 5% per year in distributions. Energy Transfer's impressive 37% growth over the past 12 months is expected to continue with new projects, like relocating an idle plant to the Delaware Basin, which should boost capacity.
3. Enterprise Products Partners
Enterprise Products Partners operates over 50,000 miles of pipelines and owns midstream assets, including liquids storage, natural gas processing trains, fractionators, and deepwater docks. With a strong balance sheet, an A-credit rating, and the ability to grow its adjusted cash flow from operations without significant asset sales, Enterprise is a low-risk investment. This LP offers a forward distribution yield of 6.4%, potentially generating income of $1,600 from an initial investment of $25,000, bringing the total passive income from these three midstream energy stocks to around $4,728. Enterprise Products Partners boasts an impressive 27-year track record of distributing increases. With additional projects slated for completion in 2025, Enterprise could deliver even more growth.
[1]: "Enbridge Q3 2024 Results Leverage Strong Performance and Strategic Investments for Growth," Enbridge, 2024.[2]: "Energy Transfer LP Q3 2024 Results Demonstrate Resilience and Growth Prospects," Energy Transfer LP, 2024.[3]: "Enterprise Products Partners L.P. Q3 2024 Results Showcase Stable Growth and Strong Revenue Streams," Enterprise Products Partners L.P., 2024.
Investing in midstream energy stocks like Enbridge, Energy Transfer, and Enterprise Products Partners can be an excellent way to diversify your finance portfolio and generate passive income. These companies, with their extensive pipeline networks and consistent returns, allow individual investors to gain exposure to the money-making potential of the energy sector. For instance, an initial investment of $25,000 in Enbridge could yield around $1,500 in passive income this year, thanks to its high dividend yield.
