Master limited partnerships (or MLPs) have clearly trailed the broader market in 2025. While the Energy Select Sector SPDR, a popular way to track oil/energy companies, has gained about 3.2% year to date, the benchmark Alerian MLP Index is down roughly 2.5%, even as the S&P 500 keeps hitting new highs. Still, not all MLPs are created equal. Names like Enterprise Products Partners LP ((EPD Quick QuoteEPD - Free Report) ), Energy Transfer LP ((ET Quick QuoteET - Free Report) ), and Plains All American Pipeline LP ((PAA Quick QuotePAA - Free Report) ) continue to draw investor attention despite the sector’s weak showing.

The Business of MLPs

MLPs differ from regular stocks in that interests in them are referred to as units, and the unitholders (not shareholders) are partners in the business. Importantly, these hybrid entities bring together the tax benefits of a limited partnership with the liquidity of publicly traded securities.

Finally, the assets that these partnerships own — oil and natural gas pipelines and storage facilities — typically bring in stable fee-based revenues and have limited, if any, direct commodity-price exposure. This enables these MLPs to pay out fairly growing distributions.

Why MLPs Have Fallen Behind

One key reason for the underperformance is investor caution around near-term volume growth. Several operators pointed to uneven producer activity, with some customers staying disciplined amid commodity price swings. While volumes remain healthy overall, the lack of clear acceleration has limited upside enthusiasm for MLPs.

Another headwind has been contract renewals and pricing pressure in some areas. As older agreements expire, new contracts are sometimes reset at lower or more competitive rates. Even with pipelines running full, these resets can slow near-term cash flow growth and hold valuations back.

Project timing has also mattered. Many large investments are weighted toward later stages, so the earnings boost comes further out. Investors looking for quicker payoffs have shifted elsewhere, leaving MLPs waiting until new projects are fully online and contributing.

What Changes to Expect in 2026

Looking ahead, the tone from management teams turns more constructive. Executives repeatedly highlighted strong long-term demand for crude oil, natural gas and NGL infrastructure, supported by exports, power generation and data center growth. Underinvestment in supply and shrinking spare capacity also point to firmer fundamentals over time, setting the stage for better utilization and steadier cash flows.

Many of the improvements that companies have been working on are expected to start paying off in 2026. Cost cuts, benefits from past acquisitions, and built-in contract increases should help lift earnings. At the same time, debt levels are likely to come down, giving companies more financial flexibility and better support for distribution. This combination could make the space more attractive to investors again.

MLPs to Watch

While the broader MLP space has struggled in 2025, the outlook into 2026 appears more balanced, with improving fundamentals and visible growth drivers. In that context, established operators with scale, diversified assets and disciplined capital allocation stand out. Stocks like Enterprise Products Partners, Energy Transfer and Plains All American Pipeline — each currently carrying a Zacks Rank #3 (Hold) — remain key names to watch as the cycle turns and long-term demand trends start to matter again. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Enterprise Products Partners: It is a Houston-based MLP and one of North America’s largest midstream operators. Founded in 1968, EPD provides essential infrastructure that connects energy producers with end markets. The partnership serves customers across natural gas, natural gas liquids, crude oil, refined products and petrochemicals.

Its asset base is broad and well diversified. Enterprise operates extensive gathering, processing, transportation, storage, and fractionation systems, along with major marine and export terminals. With tens of thousands of miles of pipelines and large storage capacity across key U.S. energy regions, the partnership supports both domestic demand and growing export flows while generating steady, fee-based cash flows.

EPD pays out a quarterly distribution of 54.50 cents per unit. At the current price, this gives Enterprise an annualized distribution yield of 6.8%.

Energy Transfer: It is a Dallas-based MLP with one of the largest and most diversified midstream networks in the United States. Founded in 1996, ET owns extensive natural gas, NGL, crude oil, and refined products infrastructure, spanning major U.S. production basins and key demand markets.

The partnership’s assets include pipelines, storage, processing, fractionation, export terminals and fuel marketing operations. Energy Transfer also controls the general partner and incentive distribution rights of Sunoco and holds a significant stake in USA Compression Partners, adding exposure to fuel distribution and compression services.

ET pays out a quarterly distribution of 33.25 cents per unit. At the current price, this gives Energy Transfer an annualized distribution yield of 8.1%.

Plains All American Pipeline: Headquartered in Houston, PAA is an MLP focused on moving and storing crude oil and natural gas liquids across North America. Founded in 1998 and public since 2001, it operates a wide network of pipelines, storage tanks, terminals, and gathering systems serving major producing regions and market hubs.

The partnership runs two core segments, crude oil and NGLs, with assets concentrated in areas like the Permian Basin, the Gulf Coast, and Cushing, OK. Plains All American’s infrastructure supports both production flows and end-market demand. Investors can also access the same economic interest through Plains GP Holdings, which offers a corporate ownership structure.

PAA pays out a quarterly distribution of 38 cents per unit. At the current price, this gives Plains All American an annualized distribution yield of 8.6%.