High-yielding energy names are on fire. These are Wall Street’s favorites
Investors looking to ride the wave of accelerated energy demand in the United States can also find attractive income in one corner of the market. Certain pipeline companies fall under the category of master limited partnerships, which are publicly traded and offer investors high dividend yields due to their tax friendly structure. The assets have jumped as the Iran war sent oil prices skyrocketing. The conflict has resulted in rising demand for U.S. energy supplies, including liquefied natural gas, which runs through the MLPs’ pipelines. On top of that, the sector is expected to benefit from the data center buildout. On Wednesday, the Global X MLP & Energy Infrastructure ETF (MLPX) hit an all-time high. It is up 27% this year, and the fund currently pays a dividend yield of nearly 4%. MLPX YTD mountain Global X MLP & Energy Infrastructure ETF year to date While oil prices have retreated from their highs recently as investors hope for a resolution to the Iran war, Bank of America believes midstream oil companies are well positioned for both bull and bear cases in the commodity. “If oil prices remain high, production will increase, improving pipeline volume,” analyst Jean Ann Salisbury said in a March note. “If prices decrease, the economics improve for new pipeline capacity that is coming online in gas-heavier areas.” Income tradeoff Still, the elevated yields on MLPs come with the tradeoff of complicated taxes. Partnerships aren’t subject to corporate income taxes. Rather, the partnership reports its total net income and delivers a Schedule K-1 tax form to each investor, detailing that individual’s share of MLP income. Those investors use the form to file their tax returns. However, K-1s can arrive late – and that can create complexity come tax time, requiring those investors to go on extension. Wall Street’s buy list With that in mind, CNBC Pro screened for the names in the MLPX that are loved by Wall Street, with 55% or more of the analysts covering the MLPs giving them a buy or overweight rating, according to FactSet. They also have a dividend yield higher than 1.5%. The Williams Companies has a 2.7% dividend yield and about 7% upside to the average price target, per FactSet. The natural gas infrastructure company operates more than 33,000 miles of pipeline across the U.S. More than 7 out of 10 analysts covering the MLP rate it a buy or overweight. Among those is Goldman Sachs’ John Mackay, who upgraded Williams to buy from neutral in April. He called the company’s core transmission asset, the Transcontinental Gas Pipeline system, “the most strategically located pipeline system” in the U.S. “As demand for LNG exports, utility-scale demand, and data center demand grows along Transco’s footprint, we are constructive on WMB’s ability to accelerate the pace of near-term gas transmission project announcements vs the relative slowdown in announcements from 2Q25+, supporting line of sight to high-quality EBITDA growth,” Mackay wrote. WMB YTD mountain The Williams Companies year to date Williams’ shares are up 30% in 2026. Energy Transfer , meanwhile, is up 21% this year. The MLP, which has 140,000 miles of energy infrastructure across the nation, has a current dividend yield of 6.7% and 16% upside to the average price target. About 83% of the analysts covering it give it a buy or overweight rating. Bank of America reiterated its buy rating on Energy Transfer last week, saying it has “one of the most compelling dividends in the space.” “We believe ET warrants a higher multiple versus current trading levels given its diversified portfolio, improving FCF [free cash flow] and coverage metrics as well as exposure to growing global NGL [natural gas liquids] exports,” Salisbury said in a note to clients. ET YTD mountain Energy Transfer year to date Also on the list is Kodiak Gas Services , which has a roughly 2.6% dividend yield. All 13 of the analysts covering the name rate it a buy or overweight, including Bank of America’s James Larkin. He sees continued upside in Kodiak’s core business, as well as strong growth potential in its new power business, which it entered with the acquisition of Distributed Power Solutions . “Our Buy rating reflects KGS’s growing, premium-priced model in the Permian backed by its stable take-or-pay compression business,” Larkin wrote in an April note. “We believe that KGS’s high mechanical availability and operational reliability create customer stickiness.” KGS YTD mountain Kodiak Gas Services year to date Kodiak shares have nearly doubled their value in 2026 — and analysts see more room to run. The name has 10% upside to the average price target, per FactSet. —CNBC’s Darla Mercado contributed reporting.
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