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Through 2024, the energy midstream sector had posted four consecutive years of double-digit total returns, including a massive 40% gain in 2024. The broad North American midstream benchmark, the Alerian Midstream Energy Index, posted a 5.0% return in 2025.

Midstream lagged the broader energy sector, which was up 8.0%, and both were well behind the S&P 500’s 17.9%.

Midstream energy companies are divided into two camps. One group is organized as a corporation; the other uses the traditional master limited partnership (MLP) structure.

After trailing the corporations in 2024, MLPs were the better-performing group in 2025. Last year, the Alerian MLP Index gained 9.8% as a total return. The Alerian Energy Midstream Corporation Index returned 5.8%. 

The difference in returns reflects the difference in yields. The MLP index had a year-end yield of 7.5%, while corporations yielded 4.3%.

You can see that dividend yields primarily drove the total returns for 2025.

In the current state of energy midstream companies, I mostly stay away from the corporations. Yields are low, and dividend growth rates are anemic. The Williams Company (WMB) yields 3.36% and increased its dividend by 5.0% last year. Kinder Morgan (KMI) yields 5.36%, and increased its dividend by just 1.7% last year. In contrast to those corporations, MLP Plains All American Pipeline LP (PAA) just increased its dividend by 10% and currently yields 8.4%.

However, MLP investing involves Schedule K-1 reporting—and I don’t recommend investing in K-1 reporting companies. So, how do we get that K-1 energy exposure? My choice is the InfraCap MLP ETF (AMZA). This exchange-traded fund yields 8.85%, and I expect a high single-digit dividend increase to be announced at the end of January.

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