Investing in midstream energy companies can be a smart strategy for generating reliable income through dividends. These companies, which operate pipelines, storage facilities, and other essential infrastructure, have a unique advantage in the energy sector. Unlike upstream producers that are directly impacted by fluctuating oil (CBJ25) and gas (NGH25) prices, midstream firms are relatively less exposed to commodity prices and mostly operate under long-term contracts. This provides a level of stability that allows them to maintain consistent dividend payouts, even when the market experiences volatility.

Although the energy sector has faced challenges recently due to the ongoing volatility in the oil and gas prices amid geopolitical concerns, high-quality midstream stocks still continue to reward investors with steady dividends. Some of these companies even offer dividend yields exceeding 6%, making them attractive for those looking to generate passive income.

Enbridge (ENB) and Western Midstream Partners (WES) are top dividend stocks in the midstream energy sector, offering yields of over 6%. Let’s look at the dividend payouts of these companies.

Dividend Stock #1: Enbridge

For investors seeking a stable, high-yield stock with long-term growth potential, Enbridge (ENB) could be a compelling option in the midstream energy sector. This energy infrastructure giant boasts an extensive pipeline network that connects major energy supply regions to key markets across North America. Moreover, it maintains a diversified portfolio that includes both traditional and lower-carbon energy assets. Thanks to its high-quality assets, Enbridge witnesses a high system utilization rate, which drives its distributable cash flow (DCF) and supports dividend payments.

One of the top reasons for investing in Enbridge stock is its impressive dividend track record. The company has consistently increased its dividend for 30 consecutive years, and thanks to its strong cash flow and low-risk business model, it remains well-positioned to continue that streak. Its income is largely supported by long-term contracts and regulated tolling structures, which provide a steady stream of DCF and support higher payouts.

Beyond its traditional energy operations, Enbridge has invested in renewable energy, ensuring it remains well-positioned to capitalize on energy transition opportunities. This strategic diversification strengthens the company’s long-term prospects and provides additional growth avenues.

Enbridge’s gas transmission and midstream operations further contribute to its consistent earnings, while its utility business delivers low-risk, regulated returns that reinforce dividend sustainability. Additionally, the company’s recent acquisitions will help expand its regulated earnings base, adding stability to its payouts.

Management projects mid-single-digit growth in both earnings per share (EPS) and DCF over the long term, which bodes well for continued dividend growth.

While analysts give Enbridge stock a “Moderate Buy” consensus rating, it offers an attractive forward yield of 6.3%.

Dividend Stock #2: Western Midstream Partners

Western Midstream Partners (WES) is another compelling energy stock to own for its high and dependable yield. This midstream company gathers, processes, and transports natural gas, crude oil, and other hydrocarbons. It also buys and sells these commodities under specific contracts, ensuring a diversified revenue stream.

One of the advantages of investing in Western Midstream is its ability to generate stable cash flows. Unlike companies directly exposed to energy price swings, WES operates under fee-based contracts that shield it from commodity price volatility. Additionally, agreements structured with safeguards such as minimum-volume commitments and cost-of-service provisions provide further insulation, ensuring steady revenues even when energy markets fluctuate. This financial stability translates into consistent dividend payouts.

Further, Western Midstream’s geographically diversified assets and access to multiple productive reservoirs support volume growth. Moreover, its focus on improving operational efficiency augurs well for future earnings and payouts.

Western Midstream increased its quarterly base dividend by 52% last year, bringing its annual payout to $3.50 per share.

Wall Street analysts currently rate WES stock as a “Hold.” However, it offers a high forward dividend yield of 8.6%.