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

Industry Overview - The pipeline sector is currently one of the best investment opportunities due to its consistent and predictable business models, attractive distributions, and robust yields [1] - The sector is inexpensive compared to historical levels, with a favorable environment for pipeline stocks [1] Company Discipline - Companies in the energy and pipeline sectors are exhibiting more discipline, focusing on cash flow growth rather than production growth, leading to healthier customer bases for pipeline companies [2] - Midstream companies are operating with lower leverage and better distribution coverage, having learned to manage within their cash flow means [2] Demand Drivers - The increasing power needs of artificial intelligence (AI) are driving demand for natural gas, creating new project opportunities for pipeline companies [3] - The favorable regulatory environment under the Trump administration is encouraging more drilling in the fossil fuels industry [3] Company Highlights Energy Transfer - Energy Transfer has one of the largest integrated midstream systems in the U.S. and is trading at an enterprise value (EV)-to-EBITDA multiple of just over 8 times, significantly below the historical average of 13.7 times [4] - The company offers a forward yield of 6.9% and plans to increase its distribution by 3% to 5% annually, with its distribution well covered by distributable cash flow (DCF) [5] - Energy Transfer plans to spend $5 billion in growth capex this year, up from$3 billion in 2024, with opportunities in AI data centers [6] Enterprise Products Partners - Enterprise Products Partners has increased its growth capex budget to between $4 billion to$4.5 billion this year, reflecting a strong growth project environment [7] - The company has consistently increased its distribution for 26 years, currently offering a yield of 6.3% that is well covered by DCF [8] - The stock trades at a forward EV/EBITDA of 10 times, which is still below historical averages despite its premium valuation due to consistency and a strong balance sheet [9] Western Midstream - Western Midstream has the highest yield among the listed companies at 8.5%, with plans to raise its base distribution by around 4% in 2025 [10] - The company serves as the midstream provider for Occidental Petroleum, which owns over 40% of its stock, and has a strong balance sheet with leverage below 3x [11][12] - Western Midstream announced the Pathfinder Pipeline project, expected to cost between $400 million to$450 million, setting the stage for growth in future years [13]