3 Top Oil & Gas MLPs to Consider with Dividend Yields Above 5%

Elevated energy prices are once again putting the spotlight on oil and gas stocks, but income investors don't have to rely solely on upstream producers to benefit from the favorable backdrop.

In fact, several energy master limited partnerships (MLPs) are offering substantial cash distributions while benefiting from fuel distribution, midstream infrastructure, and improving operating trends.

Notably, MLPs are structured as pass-through entities that typically avoid corporate-level federal income taxes and return a significant portion of their available cash to unitholders through distributions, helping explain their lofty yields and high payout ratios.

Three names that stand out at the moment are CrossAmerica Partners CAPL), Delek Logistics Partners DKL), and Global Partners GLP), which currently offer annual distribution yields ranging from roughly 6% to 9%.

CrossAmerica Partners – CAPL

Zacks Rank #1 (Strong Buy)

Stock Price: $22

CrossAmerica Partners is a wholesale fuel distributor, convenience-store operator, and owner of real estate used in the retail distribution of motor fuels.

More importantly for income investors, CrossAmerica pays a quarterly distribution of $0.53 per unit, or $2.12 annually for a current yield of 9%.

The hefty payout also looks better supported following a strong second quarter. CrossAmerica's Q2 adjusted EBITDA jumped 40% year over year to $51.8 million, while distributable cash flow (DCF) surged 50% to $33.6 million.

Furthermore, CrossAmerica's distribution coverage ratio improved to 1.68X from 1.12X in the prior-year quarter, comfortably above the 1.0X level needed to fully cover its payout and providing a healthy cash-flow cushion. Meanwhile, leverage declined to 3.57X, a relatively manageable level for an energy MLP.

Adding to the appeal is that CrossAmerica recently extended the maturity of its credit facility to 2031.

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Delek Logistics Partners – DKL

Zacks Rank #1 (Strong Buy)

Stock Price: $55

Delek Logistics operates pipelines, terminals, storage, crude and natural-gas gathering systems, and water infrastructure primarily around the lucrative Permian and Delaware basins.

DKL's quarterly distribution was recently raised to $1.14 per unit, equating to $4.56 annually and a yield over 8%. More impressively, this marked Delek Logistics' 54th consecutive quarterly distribution increase.

Supporting that payout, Q2 adjusted EBITDA rose to $143.5 million from $127.4 million a year ago, while adjusted DCF increased 11% to $80.5 million.

Distribution coverage improved to 1.33X from 1.22X in the prior-year period. Management also reiterated 2026 adjusted EBITDA guidance of $520-$560 million after posting record adjusted EBITDA of $535.6 million last year. 

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Global Partners – GLP

Zacks Rank #2 (Buy)

Stock Price: $52

Rounding out the list is Global Partners, which operates an extensive fuel distribution, storage, wholesale, and convenience-store platform.

Global Partners most recently reported Q2 net income of $71 million, nearly tripling from $25.2 million a year earlier. Adjusted EBITDA surged 51% to $148.2 million, while adjusted DCF climbed to $92.5 million from $52.3 million.

GLP also raised its quarterly distribution to $0.78 per unit, or $3.12 annually, giving shares a forward yield of roughly 6% at recent prices.

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Bottom Line

High yields alone don't make a stock attractive, but CrossAmerica Partners, Delek Logistics Partners, and Global Partners pair lofty distributions with improving underlying cash generation.

Even better, rising EPS revisions have led to their favorable Zacks Rankings, with each stock being reasonably valued at well under 20X forward earnings.

With all three generating considerably stronger distributable cash flow in their latest quarters, these high-yield energy stocks remain worthy of consideration for income-focused investors.

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This article originally published on Zacks Investment Research (zacks.com).

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