With the uncertain geopolitical circumstances, China’s economic weakness, and oil demand and supply drift, the energy industry is experiencing robust demand, which is expected to continue in the upcoming period.

Given the industry tailwinds, it could be wise to invest in fundamentally sound high-yield energy stocks Cheniere Energy Partners, L.P. (CQP), Enterprise Products Partners L.P. (EPD), and MPLX LP (MPLX).

Through 2024, oil prices have been volatile. Recently, oil prices slipped with Israel accepting a proposal to handle disagreements blocking a ceasefire deal in Gaza, which has resulted in eased supply concerns. However, China’s weak economic circumstance continued to weigh on demand outlook.

Further, U.S. oil, gas M&A activities climbed strongly last year as energy companies increased their development spending, driven by higher cash flows from profits in previous periods. Over $49.2 billion was spent on mergers and acquisitions by top energy companies in 2023, up from $31.4 billion in 2022, mainly driven by mega deals among integrated oil and gas companies.

Global oil demand surged by 870 kb/d in the second quarter of 2024. The demand is expected to rise by less than 1 mb/d in 2024 and 2025.

World supply rose 230 kb/d to 103.4 mb/d in July with a significant OPEC+ increase which offset losses from non-OPEC+. Annual gains have increased from 730 kb/d in 2024 to 1.9 mb/d in 2025. Non-OPEC+ production is projected to rise 1.5 mb/d in 2024 and 2025, while OPEC+ is expected to fall by 760 kb/d in 2024 but regain by 400 kb/d in 2025 if voluntary cuts stay in place.

Thus, in these volatile situations, it could be wise to add some of the best high-yield energy stocks. High-yield segment includes companies which pay regular dividends to the shareholders and offer consistent growth in their dividends offering passive income opportunities and great potential of capital appreciation over the long-term.

Moreover, investors’ interest in energy stocks is evident from the iShares Global Energy ETF’s (IXC) 9% returns over the past year.

Considering the industry’s robust outlook, let’s delve into the fundamentals of the top high-yield MLPs – Oil & Gas stocks, beginning with the third choice.

Stock #3: Cheniere Energy Partners, L.P. (CQP)

CQP offers liquefied natural gas (LNG) to integrated energy companies, utilities, and energy trading companies worldwide. It owns and operates a natural gas liquefaction and export facility at the Sabine Pass LNG production terminal.

On August 5, CQP’s subsidiary Cheniere Marketing, LLC entered into a long-term liquefied natural gas sale and purchase agreement with Galp Trading S.A., a subsidiary of Galp Energia, SGPS, S.A.

On July 26, CQP declared a cash distribution of $0.81 per common unit to unitholders of record as of August 7, 2024, comprised of a base amount equal to $0.77 and a variable amount equal to $0.035 and the related distribution to its general partner. These distributions were paid on August 14, 2024.

CQP pays an annual distribution of $3.69 per unit, which translates to a yield of 7.40% on the current share price. Its four-year average yield is 7.58%. The company’s dividend payouts have grown at a CAGR of 14.5% over the past three years. CQP has raised its dividends for eight consecutive years.

CQP reported revenues of $1.89 billion for the second quarter that ended June 30, 2024 and its income from operations were $766 million. The company’s net income came in at $570 million and $0.95 per common unit for the quarter, respectively.

Furthermore, the company’s adjusted EBITDA rose 9.9% from the year-ago value to $832 million. As of June 30, 2024, the company’s cash and cash equivalents and total assets stood at $351 million and $17.51 billion, respectively.

Analysts expect CQP’s revenue and EPS for the third quarter (ending September 2024) to increase 1.6% and 18.7% year-over-year to $2.16 billion and $1.05, respectively. Also, the company has surpassed the consensus EPS estimates in three of the trailing four quarters.

Shares of CQP have surged marginally over the past three months to close the last trading session at $49.78.

CQP’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

CQP has a B grade for Quality, Sentiment, and Momentum. It is ranked #10 out of 24 stocks in the A-rated MLPs – Oil & Gas industry.

In addition to the POWR Ratings we’ve stated above, we also have other ratings for CQP. Get all CQP ratings here.

Stock #2: Enterprise Products Partners L.P. (EPD)

EPD offers midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. The company operates through four segments: NGL Pipelines & Services; Crude Oil Pipelines & Services; Natural Gas Pipelines & Services; and Petrochemical & Refined Products Services.

On July 30, EPD announced an expansion project with the Houston Ship Channel in response to continued solid customer demand for natural gas liquids export capacity. It is adding its refrigeration capacity at the Enterprise Hydrocarbons Terminal (EHT) to boost propane and butane export capabilities by around 300,000 barrels per day (bpd).

The expansion will bode well with the company by adding extra capacity for LPG, and enhancing the instantaneous loading rates for propane and butane and offer more capacity for propylene exports.

On July 10, EPD’s Board of Directors declared a quarterly cash distribution to be paid to its common unitholders for the second quarter of 2024 of $0.52 per unit, or $2.10 per unit on an annualized basis.

EPD pays an annual dividend of $2.10, which translates to a yield of 7.13% at the current share price. Its four-year average dividend yield is 7.71%. Moreover, the company’s dividend payouts have increased at a CAGR of 4.6% over the past three years. EPD has raised its dividends for 25 consecutive years.

During the second quarter that ended June 30, 2024, EPD’s revenues increased 26.6% year-over-year to $13.48 billion. Its operating income grew 11.8% year-over-year to $1.77 billion. The company’s net income and earnings per unit of $1.42 billion and $0.64, indicates growth of 10.8% and 12.3% from the prior year’s quarter, respectively.

Furthermore, the company’s adjusted EBITDA rose 10% year-over-year to $2.39 billion. And its adjusted CFFO rose 10.7% from the previous year’s quarter to $2.07 billion.

Analysts expect EPD’s revenue and EPS for the third quarter (ending September 2024) to increase 17.4% and 12.9% year-over-year to $14.08 billion and $0.68, respectively. Further, the company has surpassed the consensus revenue estimates in three of the four trailing quarters.

Over the past six months, EPD’s stock has gained 7.3% and 10.9% over the past year to close the last trading session at $29.44.

EPD’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

The stock has a B grade for Value, Momentum, and Stability. Within the same industry, EPD is ranked #9 of 24 stocks.

Click here to access additional ratings of EPD for Sentiment, Growth and Quality.

Stock #1: MPLX LP (MPLX)

MPLX primarily owns and operates midstream energy infrastructure and logistics assets. The company operates through Logistics and Storage; and Gathering and processing segments.

On July 30, MPLX’s board of directors declared a quarterly cash distribution of $0.85 per common unit for the second quarter of 2024, or $3.40 on an annualized basis. The distribution was paid on August 16, 2024, to common unitholders of record as of August 9, 2024.

MPLX pays an annual dividend of $3.40, which translates to a yield of 7.98% at the current share price. Its four-year average dividend yield is 10.05%. Moreover, the company’s dividend payouts have increased at a CAGR of 7.3% over the past three years. MPLX has raised its dividends for 10 consecutive years.

MPLX’s total revenues and other income increased 13.4% year-over-year to $3.05 billion during the second quarter that ended June 30, 2024. Its income from operations grew 20.8% from the prior year’s quarter to $1.42 billion. Net income attributable to MPLX came in at $1.18 billion and $1.15 per limited partner unit, up 26% and 26.4% year-over-year, respectively.

For the same quarter, adjusted EBITDA attributable to MPLX LP increased 8% from the previous year’s quarter to $1.65 billion.

Analysts expect MPLX’s revenue for the third quarter (ending September 2024) to increase 4.8% year-over-year to $3.05 billion. The consensus EPS estimate for the same period of $1.05 indicates a 10.1% year-over-year growth. Moreover, the company surpassed the consensus EPS estimates in all of the trailing four quarters.

MPLX’s stock has surged 8.3% over the past six months and 21.9% over the past year to close the last trading session at $42.60.

MPLX’s POWR Ratings reflect its bright prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

MPLX has an A grade for Stability and a B for Sentiment, Momentum, and Quality. The stock is ranked #2 among 24 stocks in the A-rated MLPs – Oil & Gas industry.

To access MPLX’s other ratings for Growth and Value, click here.

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EPD shares were trading at $29.09 per share on Tuesday afternoon, down $0.35 (-1.19%). Year-to-date, EPD has gained 16.61%, versus a 18.33% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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