The energy sector is ripe with interesting dividend opportunities. Still, experienced investors know that high-yield pipeline stocks are among the best places to be for dependable midstream energy income.

Due to perceived safety and familiarity, income-hungry market participants perusing the midstream often embrace large-cap names, including the three E’s: Enbridge (ENB 1.73%), Energy Transfer, and Enterprise Products Partners. Focusing on the $123.2 billion Enbridge for a moment, investors’ adulation for that pipeline giant is understandable. It’s a large-cap stock with a dividend yield of 4.9%.

Those are appealing numbers, ones that imply a level of comfort craved by many dividend investors. However, market participants willing to go further down the midstream market capitalization spectrum can be rewarded with both significant payouts and upside potential.

The unheralded duo of Hess Midstream (HESM 0.35%) and Western Midstream (WES +1.39%) confirm as much.

All hail Hess

A couple of things explain Hess Midstream’s overlooked status. First, the company has a market value of $8.3 billion, making it a mid-cap stock, and the investing public consistently overlooks that segment. Second, while many midstream players focus on the Permian Basin or the Gulf Coast region, Hess does not.

Rather, this pipeline operator controls gas, oil, and water assets in the Bakken and Three Forks shale regions of North Dakota. Geography doesn’t alter the fact that this energy stock carries an impressive dividend yield of 7.7%. Oh yeah, it’s a payout grower, too. In January, Hess Midstream announced a distribution increase while noting that its free-cash-flow growth through 2028 should support dividend growth of at least 5% annually.

As its name implies, Hess is, in fact, a midstream company, but investors who aren’t yet familiar with this name should note this operator doesn’t compare on an apples-to-apples basis with Enbridge. Hess is fully vertically integrated within one basin and is highly dependent on its relationship with Chevron.

Today’s Change

(-0.35%) $-0.14

Current Price

$40.20

Key Data Points

Market Cap

$5.2BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day’s Range

$40.15 – $40.86

52wk Range

$31.63 – $44.14

Volume

1

Avg Vol

1.8M

Gross Margin

63.69%

Dividend Yield

7.55%

In the first quarter, Hess derived 96% of its revenue from Chevron contracts. On the surface, that sounds risky, but some of the risk is defrayed on multiple fronts. First, Hess isn’t taking on commodity price risk. Second, while there is some volume risk here, the company has sturdy minimum-volume commitments with Chevron, which provide clarity for investors. Investors don’t seem to mind the Chevron relationship, as Hess Midstream’s shares are up 16.2% this year.

Winning with Western Midstream

From an income perspective, Western Midstream is another energy stock that deserves more attention. This $18.8 billion company delivers the dividend goods, as evidenced by its 8.1% yield. More importantly, the Permian Basin operator has a five-year streak of dividend increases to its credit.

Western Midstream forecast 2026 distributable cash flow of $1.85 billion to $2.05 billion, and first-quarter operating and maintenance expenses declined by 7%, implying this payout is on solid ground. The potential long-term upside for both the dividend and the stock is supported by the operator’s enviable position in the Delaware Basin. Not the state of Delaware, but one of the most lucrative portions of the broader Permian Basin.

In the first quarter, the company produced a record amount of oil and natural gas liquids (NGLs) in the Delaware Basin. Western paid $1.6 billion for Brazos in a deal aimed at fortifying the buyer’s position in the Delaware Basin. That deal, which closed last month, could add as much as $100 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) this year while transforming Western into a must-have partner for Permian drillers.

Western Midstream Partners

Today’s Change

(1.39%) $0.64

Current Price

$46.61

Key Data Points

Market Cap

$20BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day’s Range

$45.94 – $46.99

52wk Range

$36.90 – $48.01

Volume

650.6K

Avg Vol

1.3M

Gross Margin

51.54%

Dividend Yield

7.85%

Investors looking for another reason to consider this stock may want to examine the $1.5 billion acquisition of Aris Water Solutions, completed last October. That deal positions Western as one of the leading water providers in the Permian Basin, potentially giving it a durable competitive advantage over rivals that focus more on energy storage and transportation.

U.S. Central Command said on social media that the latest strikes “are designed to further degrade Iranian military capabilities used to attack commercial shipping” in the strait.

Even as the U.S. and Iran inch closer to all-out war again, glimmers of hope appeared on the diplomatic front, as Iran’s interior minister traveled to Pakistan, a key mediator in the conflict, for talks.

The interim deal signed last month that was meant to end the fighting has crumbled. Shipping through the Strait of Hormuz — a vital supply route for world energy supplies — has largely stalled. And as fighting intensifies, both sides have targeted civilian infrastructure relied on by millions of people.

A new potential threat to world energy markets emerged Monday after Iran-backed rebels in Yemen said they planned to prevent Saudi Arabia from shipping in the Red Sea, an alternate route for oil exports during the war.

The escalation has pushed oil prices higher in recent weeks. Benchmark Brent crude traded Monday above $88 a barrel and regular gasoline in the U.S. climbed to an average of $4 a gallon, keeping pressure on Americans’ wallets ahead of midterm elections this fall.

The U.S. military identified two soldiers who were killed in Jordan in attacks that left a third person missing. Separately, the military confirmed another death in Iraq on Saturday during the “controlled detonation” of a downed Iranian drone. President Donald Trump took to social media on Monday to warn that “Every time Iran kills an American Soldier they will pay for that killing many times over!”

Trump was planning to attend a ceremony on Tuesday evening at Dover Air Force Base, where at least one service member’s remains were due to arrive.

US targets strategic sites in Iran

U.S. Central Command said Sunday’s airstrikes targeted “Iranian military command centers, air defense and coastal surveillance sites, maritime capabilities, missile and drone launch sites and communications networks.” Last week, the U.S. struck bridges and a tower at an Iranian port.

Iran’s state-run IRNA news agency reported that the American strikes killed at least one person around Tabriz, a northwestern city about 520 kilometers (325 miles) from the capital, Tehran. Tabriz is believed to host underground missile bases run by Iran’s paramilitary Revolutionary Guard.

U.S. strikes likely also hit Bandar Imam Khomeini in Khuzestan province, Sirik and Jask in Hormozgan province and Konarak and Chahbahar in Sistan and Baluchistan province, IRNA reported.

The British military’s United Kingdom Maritime Trade Operations center said Monday evening that a second ship had been attacked a day earlier in the Strait of Hormuz, this one off the coast of the United Arab Emirates.

The other vessel caught fire in the Strait of Hormuz after being hit by a projectile near the coastline of Oman. The crew abandoned the vessel, which was adrift and still ablaze hours later, the UKMTO said.

The route around Oman has been the one the U.S. military has encouraged ships to travel to avoid Iran’s control. The Guard later claimed it was targeting tankers in the strait.

Tehran also hit U.S.-allied countries throughout the Middle East.

Kuwait said its air defenses fired at an incoming barrage, and Jordan’s armed forces said Monday evening they had shot down three Iranian missiles, adding that there had been no material damage or casualties. There was no immediate word from Iran.

Bahrain’s Foreign Ministry condemned Iranian drone strikes targeting the country’s air traffic systems, saying they endanger travel for civilians.

The Strait of Hormuz remains key to the conflict

A new pressure point could emerge for world energy markets as Yemen’s Houthi rebels announced on Monday a maritime embargo against Saudi Arabia. The Houthis, who are backed by Iran, said they would block shipping between the Red Sea and the Gulf of Aden in response to an attack on Sanaa International Airport last week that they blamed on Saudi Arabia.

With the Strait of Hormuz blocked up, Saudi Arabia has been relying on a pipeline to the Red Sea to get millions of barrels of oil out to market. The Houthis earlier demonstrated their ability to disrupt shipping there when they targeted ships for months over the Israel-Hamas war in Gaza, with over 100 vessels attacked.

There was no immediate response from Saudi Arabia.

Trump has threatened to target Iran’s power stations and bridges to try to compel Tehran to loosen its hold on the Strait of Hormuz, through which one-fifth of world oil supplies were shipped before the war. Recent attacks suggest the U.S. military is carrying out that plan.

The U.S. in the past week reimposed a naval blockade on Iranian ports to halt its shipments of crude oil. The military says it has redirected seven ships and disabled one since then.

A glimmer of hope for diplomacy

Pakistan has intensified diplomatic efforts in recent days to resuscitate the interim ceasefire reached last month that called for resolving remaining issues tied to the war within 60 days. The truce unraveled after both sides resumed attacks on each other’s military installations and other infrastructure.

Iranian Interior Minister Eskandar Momeni arrived in Islamabad on Monday for two days of talks with Prime Minister Shehbaz Sharif and others. Momeni’s counterpart, Pakistani Interior Minister Mohsin Naqvi, expressed optimism.

“God willing, we will have good news,” Naqvi said.

On Sunday, U.S. Secretary of State Marco Rubio told reporters that the U.S. is still open to negotiating with Iran but that “it has to be real.”

“If the door opens to diplomacy — if the guys that want to do something productive for Iran win and take control of that system, or take control of the negotiations — that’ll be a very positive development,” Rubio said. “That’s not where we are tonight, unfortunately.”

Iranian authorities on Sunday said at least 50 people have been killed and 517 wounded in the latest rounds of U.S. strikes. Since the war began on Feb. 28, 17 U.S. service members have been killed.