Three pipeline stocks yield about 7% on $120,000 investment

According to reports from AOL and 247wallst.com, three midstream pipeline companies act like toll booths for oil and gas, collecting fees regardless of crude oil price fluctuations. These fees come from gathering, processing, storing, or shipping oil, natural gas, or wastewater.

Investing $120,000 equally across these three pipeline stocks can generate roughly $8,791 to $9,000 annually, representing a combined yield of about 7%. Western Midstream offers the highest yield among the three at 9%, while Enbridge is noted for 31 consecutive years of dividend increases, providing a safer investment profile.

Western Midstream's CEO Oscar Brown stated that the company's distribution coverage ratio is about 1.4, indicating that its cash flow comfortably exceeds dividend payouts. This suggests a stable financial position for sustaining dividends.

However, investors should be aware of potential complications such as tax form issues, currency fluctuations, and IRA-related restrictions that could affect payouts from these investments.

Pipeline companies' fee-based revenue model means their income depends primarily on the volume of resources transported rather than commodity price swings, offering a relatively steady income stream for investors.

These insights were provided by AOL and 247wallst.com in their recent financial coverage of midstream pipeline stocks.