3 Ultra High Yield Energy Stocks Paying 5% to 11% That Most Investors Overlook

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3 Ultra High Yield Energy Stocks Paying 5% to 11% That Most Investors Overlook.

investing ideas :: 10hrs ago :: source - motley fool

By Austin Smith

Most income investors scanning for yield stop at the obvious names: integrated oil majors, utilities, or bond funds. What they miss is a layer of energy infrastructure and royalty partnerships paying distributions from 7% to over 10% annually, with tax structures that can make after-tax yield even more attractive.

Three master limited partnerships stand out: a midstream giant with data center ambitions, a royalty collector with zero drilling exposure, and a logistics powerhouse with back-to-back 12.5% distribution hikes.

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Key metrics for ranking these partnerships: current yield, distribution growth consistency, cash flow sustainability, balance sheet health, and business model durability across the commodity price cycle.

#3: Energy Transfer

Energy Transfer (NYSE: ET) is the largest of the three by market cap at $65 billion, operating one of North America's most extensive midstream networks. The current quarterly distribution is $0.335 per unit, annualizing to $1.34, against a unit price of $18.75, implying a yield near 7.2%. The distribution has increased every quarter for two years, from $0.3175 in Q2 2024 to the current level.

Q4 2025 results were mixed. Revenue of $25.32 billion beat estimates by 7.19% grew 29.6% year over year, but EPS of $0.25 missed the $0.367 estimate was dragged by a $277 million non-cash impairment and $910 million in interest expense. A timing mismatch on NGL hedges is expected to reverse favorably in Q1 2026. Full-year net income rose 18.57% to $5.71 billion.

The growth story is compelling. Energy Transfer secured natural gas supply agreements with Oracle for approximately 900 MMcf/d serving 3 data centers, and its Desert Southwest expansion spans 2.3 Bcf/d with an estimated $5.6 billion price tag. Management raised 2026 EBITDA guidance to $17.45 to $17.85 billion.

The EPS miss and rising debt load keep this at #3, but the scale and pipeline are real.

#2: MPLX

MPLX (NYSE: MPLX) trades at $58.52 with a quarterly distribution of $1.0765 per unit, annualizing to roughly $4.31, putting the current yield near 7.4%. Q4 2025 EPS came in at $1.17 beat the $1.06 estimate by 10.38%. Full-year net income reached $4.912 billion, up 13.78%, and operating cash flow was $5.909 billion.

MPLX raised its distribution 12.5% for the second consecutive year and returned more than $4 billion to unitholders in 2025 through distributions and buybacks.

The 2026 capital plan allocates $2.7 billion to growth projects, with 90% directed toward Natural Gas and NGL Services. Key projects include the Blackcomb Pipeline and a Gulf Coast LPG export terminal with ONEOK.

#1: Kimbell Royalty Partners

Kimbell Royalty Partners (NYSE: KRP) earns the top spot for one reason above all others: the royalty model eliminates capital expenditure risk entirely. Kimbell owns mineral and royalty interests. It does not drill wells, operate equipment, or absorb cost overruns. It simply collects a share of production revenue from operators across its acreage.

The current quarterly distribution is $0.37 per unit, payable March 25, 2026. Full-year 2025 distributions totaled $1.60 per unit, and the dividend yield sits at 10.7% based on current data. Those distributions were 100% return of capital, meaning they are not subject to ordinary dividend income taxes in the year received.

Q4 2025 results were strong. Revenue of $82.45 million beat estimates by 19.38% and EPS of $0.21 beat the $0.1461 estimate by 43.74%. Full-year net income surged 713.27% to $99.65 million. Proved developed reserves hit a record of approximately 73 million Boe, up 8% year over year. The company has 85 active rigs on its acreage, representing 16.1% of all U.S. land rigs.

The royalty model means Kimbell benefits from higher oil and gas prices without bearing drilling costs. Natural gas represents 46% to 50% of its production mix, and with Henry Hub spiking to $7.72 per MMBtu in January 2026 before settling to $3.62 in February, commodity exposure cuts both ways. But the royalty structure, tax-advantaged distributions, and zero-capex model give Kimbell a distinctive profile among the three.

Image source: Getty Images

The Bottom Line

All three MLPs offer yields that dwarf the broader market. Energy Transfer brings scale and a data center growth angle. MPLX delivers the most consistent execution and clearest distribution growth trajectory. Kimbell reported the highest yield of the three, a royalty model with no capital expenditure exposure, and 100% return-of-capital tax treatment -- characteristics that are uncommon among publicly traded energy partnerships. These rankings are based on specific metrics only and do not constitute investment advice.

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Austin Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

This article was originally published by The Motley Fool