Energy Sector Still Red Hot: 7 MLPs to Buy With Fat Dividends as Oil Heads Back to $100

One sector that has soared this year is energy. It is up a stunning 70% while all the other sectors in the S&P 500 are down. Typically, this would signal that it is time to take some money off the table. However, that likely is not the case this time around. While the benchmarks Brent and West Texas Intermediate crude are well off the highs for 2022, there is a growing chorus of analysts and market strategists that feel oil can explode to the upside in 2023.

Demand could skyrocket if China starts to ease up on the seemingly constant COVID-19 lockdowns across the country. Toss in the potential for continued improvement in the economy, extending sanctions against Russia and the likelihood for the OPEC countries to manage production cuts, and you have all the ingredients for stable and likely rising crude oil prices.

One item that has changed is that some of the exploration and production companies that had variable dividend structures are cutting back on their payouts. Also, some of the mega-cap integrated giants have traded so much higher that their dividends are not near the levels they were even six months ago. One segment that makes sense for investors seeking dependable passive income is energy master limited partnerships (MLPs).

We screened our 24/7 Wall St. energy MLP research universe looking for stocks with big and dependable distributions that still have room to run. The following found seven are Buy rated on Wall Street and are solid ideas now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Antero Midstream

With shares trading near $10 apiece, this very well-run company offers a huge total return package. Antero Midstream Corp. (NYSE: AM) owns, operates and develops midstream energy infrastructure. It operates through two segments.

The Gathering and Processing segment includes a network of gathering pipelines and compressor stations that collects and processes production from Antero Resources’ wells in West Virginia and Ohio.

The Water Handling segment delivers fresh water and offers other fluid handling services, such as wastewater transportation, disposal and treatment, as well as high-rate transfer services.

Antero Midstream stock investors receive an 8.05% distribution. Wells Fargo has a target price of $13, while the posted consensus target is $10.71. The shares closed on Monday at $11.10 apiece.

Energy Transfer

This top MLP is a very safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.

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