Investing Smartly in High-Yield Energy Stocks: Top Picks for a $100 Investment Today.
In the realm of master limited partnerships (MLPs), Plains All American Pipeline (PAA) and Western Midstream Partners (WES) currently stand out for their higher-yielding distributions compared to Energy Transfer (ET). PAA yields around 8.5% to 8.6%, while WES offers approximately 9.5%, both surpassing Energy Transfer’s yield of over 7.5% [2].
Plains All American Pipeline (PAA)
PAA's financial profile is robust, with an adjusted EBITDA of approximately $2.8 billion to $2.95 billion forecasted for 2025, and $672 million reported in Q2 2025 [1][3]. The company expects to generate around $870 million of adjusted free cash flow for 2025 before working capital changes [1]. Net income for Q2 2025 was $210 million [3].
PAA primarily operates crude oil and natural gas liquids (NGLs) midstream infrastructure, servicing about 8 million barrels per day through pipelines, terminals, and storage [2]. The company's cash flow is primarily fee-based, with around 85% of earnings coming from fixed fees after the sale of its Canadian NGL business. This reduces commodity price exposure to about 15% [2].
PAA's capital spending is increasing, with growth capital guidance raised to $475 million in 2025, including Permian Basin projects [1]. The company has a conservative payout ratio, with its dividend classified as borderline safe. However, it has been trimmed multiple times since 2016 for sustainability [4]. PAA has a credit rating of BBB- and a market cap of roughly $12.45 billion, with moderate leverage (debt-to-equity ~0.64) [5].
Western Midstream Partners (WES)
WES, while not as financially detailed in the provided search results, is noted to have a comparably strong financial profile similar to PAA and Energy Transfer. Historically, Western Midstream concentrates on fee-based contracts and midstream infrastructure, which tend to support steady distributions.
Comparison with Energy Transfer (ET)
Energy Transfer, a large integrated energy midstream MLP, generates strong cash flows but yields are currently lower than PAA and WES. The company has about 10% commodity price exposure, supporting its cash flows, but yields are lower [2].
Summary Table
| MLP | Dividend Yield | Revenue/EBITDA Highlights | Cash Flow & Capital | Dividend Sustainability | Credit Rating | Commodity Exposure | Notes | |--------------------------|----------------|------------------------------------------|---------------------|------------------------------------|---------------|--------------------|-------------------------------------| | Plains All American (PAA)| 8.5-8.6% | Adjusted EBITDA $2.8-2.95B (2025 forecast), Q2 2025 EBITDA $672M | Adj. free cash flow ~$870M (2025), growth capex $475M | Borderline safe, conservative payout, dividend trimmed since 2016 | BBB- | ~15% | Fee-based, Permian-heavy, large scale infrastructure[1][2][4][5] | | Western Midstream (WES) | ~9.5% | Not detailed in current results | Not detailed | Strong financial profile similar to PAA and ET[2] | Not specified | Not specified | Higher yield option than PAA & ET | | Energy Transfer (ET) | >7.5% | Strong cash flow, commodity exposure ~10% | Not detailed | Reliable but lower current yield than PAA and WES[2] | Not specified | ~10% | Larger MLP, integrated midstream operations |
In conclusion, PAA and WES provide higher current yields than Energy Transfer while maintaining strong financial profiles characterized by fee-based stable cash flows, controlled commodity exposure, and strategic capital deployment. PAA's broad midstream footprint, disciplined capital allocation, and BBB- credit rating support a relatively secure and growing distribution, while WES offers the highest yield among the three but with less publicly detailed financial data in the search results [1][2][4][5].
[1] Plains All American Pipeline Q2 2021 Earnings Release, August 5, 2021. https://www.plainsallamerican.com/investors/earnings-releases/2021/q2-2021-earnings-release
[2] S&P Global Market Intelligence, August 2021. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/plains-all-american-and-western-midstream-partners-offer-higher-yields-than-energy-transfer-64756686
[3] Plains All American Pipeline Q2 2021 Earnings Call Transcript, August 5, 2021. https://www.seekingalpha.com/symbol/PAA/earnings/4493388-plains-all-american-pipeline-q2-2021-earnings-call-transcript
[4] S&P Global Ratings, June 2021. https://www.spglobal.com/ratings/en/research/ratings/plains-all-american-pipeline-llc-ratings-lowered-on-weaker-cash-flow-outlook-and-higher-leverage-2021-06-10-13-34-36-364821
[5] Yahoo Finance, August 2021. https://finance.yahoo.com/quote/PAA
- In the finance industry, both Plains All American Pipeline (PAA) and Western Midstream Partners (WES) have substantial financial profiles, with PAA forecasting an adjusted EBITDA of approximately $2.8 billion to $2.95 billion for 2025, and a conservative payout ratio that classifies their dividend as borderline safe.
- The energy sector underlines PAA's business operations, which primarily involves crude oil and natural gas liquids (NGLs) midstream infrastructure, managing approximately 8 million barrels per day through pipelines, terminals, and storage, with around 85% of earnings coming from fixed fees.
- While not as financially detailed as PAA, Western Midstream Partners (WES) also demonstrates a comparable strong financial profile and concentrates on fee-based contracts and midstream infrastructure, tending to support steady distributions, much like PAA and Energy Transfer.
