Forget Oil Majors: This Midstream Stock Pays a Better Dividend
2026-08-11 06:30
•Courtney Carlsen •The Motley Fool
••••• •• Axe Cap view
Why Midstream Energy Beats Oil Majors on Dividends
Enterprise Products Partners offers a reliable 5.8% yield backed by fee-based income unlike volatile oil giants.
South African investors often focus on commodity producers like Sasol for energy exposure, but midstream companies deserve a closer look, especially in today’s choppy commodity market. Enterprise Products Partners (EPD), a U.S.-listed midstream firm, pays a 5.8% dividend—well above Chevron and ExxonMobil—and derives most of its income from steady fees rather than volatile oil prices. This is a fundamentally different risk profile and explains EPD’s 28 years of distribution growth straight. While we can’t invest in EPD directly on the JSE, the USD/ZAR rate offers an indirect lens: should the rand weaken, U.S. dollar dividend earners become more attractive to locals. Sasol’s earnings remain commodity-price sensitive, making EPD’s fee-based model stand out even more. That said, if U.S. energy demand slows or regulatory changes hit pipelines, EPD’s model could suffer. This approach is not for chasing growth but for steady income in an unpredictable commodity cycle. this is just our opinion and not financial advice
We would watch the USD/ZAR for signs of rand weakness to consider increasing exposure to U.S. energy dividend plays like EPD through offshore allocations. Locally, trim Sasol given commodity sensitivity and look for dividends in more stable sectors.
- USD/ZAR
- Sasol
- U.S. energy demand slowdown
- Regulatory changes impacting pipeline fees
6/10
Enterprise Products Partners (EPD), a midstream energy company, offers a superior dividend yield of 5.8% compared to oil majors Chevron (3.7%) and ExxonMobil (2.6%). The company's fee-based business model shields it from commodity price volatility, with 80% of gross operating margin derived from fees. EPD has raised its distribution for 28 consecutive years and reported record Q2 EBITDA of $2.8 billion, supported by strong U.S. energy demand.
Our take is based on reporting first published by The Motley Fool.