3 Pipeline Stocks to Buy With $1,000 and Hold Forever

If you're looking for stocks with consistent, predictable business models that pay attractive distributions and have robust yields, the pipeline sector is one of the best places to look. The sector as a whole is inexpensive versus historical levels, while the current environment is one of the best these stocks have seen in many years.

At the same time, companies in both the energy and pipeline space are more disciplined today, with better balance sheets and not over-chasing growth. Energy producers today are much more focused on growing their cash flows and not chasing production growth. This gives pipeline companies a healthier group of customers.

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Midstream companies, meanwhile, now operate with lower leverage and have more robust coverage for their distributions. They, too, have learned to live within their cash flow means.

In addition, the power needs of artificial intelligence (AI) are increasing demand for natural gas. As volume-based companies, this is helping create new project opportunities for pipeline companies. At the same time, the Trump administration has taken a much more favorable stance toward the fossil fuels industry, encouraging more drilling.

Against this favorable backdrop, let's look at three pipeline stocks you can buy and hold for the long term.

1. Energy Transfer

Owning one of the largest integrated midstream systems in the U.S., Energy Transfer (NYSE: ET) arguably has some of the best midstream assets in the country. At the same time, it also has one of the cheapest stocks in the space, with it trading at an enterprise value (EV)-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) multiple of just over 8 times. That's well below the historical valuation of 13.7 times that midstream master limited partnerships (MLPs) averaged between 2011 and 2016.

The company also carries a forward yield of 6.9% and plans to raise its distribution by 3% to 5% a year moving forward. Its distribution is well covered by its distributable cash flow (DCF). DCF is essentially its operating cash flow minus maintenance capital expenditure (capex).

At the same time, the company is seeing increasingly attractive growth project opportunities. It plans to spend $5 billion in growth capex this year, up from $3 billion in 2024. It sees a number of AI data center and power opportunities ahead, and signed its first data center project earlier this year with data center developer Cloudburst.

2. Enterprise Products Partners

Another company increasing its growth capex this year is Enterprise Products Partners (NYSE: EPD), which has raised its budget to between $4 billion to $4.5 billion this year from $3.9 billion in 2024. Enterprise has traditionally been very conservative, reducing its growth capex to $1.8 billion in 2021 and $1.6 billion in 2022, give the fallout from the pandemic. As such, its increased spending speaks volumes to the current strong growth project environment the midstream space is seeing.

However, one of the biggest reasons to own the stock over the long haul is its consistency. The company has increased its distribution for 26 straight years though both difficult economic times and tough energy markets. The stock currently has a yield of 6.3% that is well covered by its DCF.

Enterprise's stock is more expensive than Energy Transfer, as it trades at a forward EV/EBITDA of 10 times. However, the stock has generally traded at a premium, given its consistency and strong balance sheet, and is still trading well below historical averages.

3. Western Midstream

The stock with the highest yield on this list is Western Midstream (NYSE: WES), which carries an 8.5% yield. It plans to raised its base distribution by around 4% in 2025 from its end-of-year 2024 run rate. The overall year-over-year distribution increase would be about 13% over 2024 levels. It is targeting a mid- to low-single-digit annual percentage distribution growth rate moving forward.

The company primarily serves as the midstream provider for its parent Occidental Petroleum, which also owns over 40% of the stock. In its role, it provides Occidental with gathering and processing services in the Delaware Permian, Powder River Basin (PRB), and the Denver-Julesburg (DJ) Basin.

Western Midstream's balance sheet is in stellar shape, with leverage below 3x, and it generated $1.3 billion in free cash flow last year. The company's growth capex will be a bit lower in 2025 than 2024, but it plans to focus on organic growth projects and synergistic bolt-on acquisitions in the future.

It just announced the large Pathfinder Pipeline project, which will be able to transport over 800,000 barrels a day of produced water. While only $65 million will be spent on the project this year, the total project is expected to cost between $400 million to $450 million. As such, 2026 should be more of a growth capex year, setting up this high-yielding stock for solid growth in outer years.

The stock is attractively valued, with an EV/EBITDA of just over 9x 2025 analyst estimates.

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Geoffrey Seiler has positions in Energy Transfer, Enterprise Products Partners, and Western Midstream Partners. The Motley Fool recommends Enterprise Products Partners and Occidental Petroleum. The Motley Fool has a disclosure policy.