This midstream energy partnership occupies a critical but often overlooked position in the energy value chain, sitting between oil and gas producers and end markets, operating the gathering, compression, processing, and transportation infrastructure that producers depend on every day. With a forward dividend yield of 8.82% ranking in the top 20% of all dividend-paying stocks and a 3-year dividend compound annual growth rate (CAGR) of 19%, this partnership has demonstrated that it can grow its distribution meaningfully while still maintaining a conservative leverage profile of 3.0x net debt to forward earnings — well below the peer group average of 3.6×. Its beta of 0.71 signals that price movements are less correlated to the broader equity market than typical stocks, offering a degree of portfolio insulation that income investors in the energy sector often find difficult to secure.
The partnership’s asset concentration in three prolific U.S. production basins gives it a geographically diversified yet operationally coherent footprint, and the majority of its revenues are protected by fee-based contracts that insulate cash flows from direct commodity price swings. A significant strategic acquisition in late 2025 meaningfully deepened the partnership’s produced water handling and recycling capabilities, creating a more integrated midstream platform and expanding its serviceable market among producers looking to simplify their operational relationships.
These strengths are balanced against real near-term headwinds: a large customer has shifted some drilling activity away from acreage the partnership services, and natural gas pricing pressures in West Texas have led to temporary volume curtailments by some private producers. The partnership’s management has been transparent about the temporary nature of these disruptions, with activity expected to normalize beginning in 2027.
Increasing the position in this partnership within the Best Dividend Stocks Portfolio reflects confidence in its fee-based cash flow model, its distribution growth track record, and its structural positioning as an essential midstream service provider in some of the most active production regions in the United States.
