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EPD

Got $500? The Best Energy Dividend Stock to Buy Right Now

May 08, 2026 — 08:25 pm EDT

Written by

Jeff Siegel for

The Motley Fool->

Key Points

- A small position doesn’t have room for large swings in income or price. That makes stability more important than chasing the highest yield.

- Fee-based businesses provide income you can count on.

- Enterprise Products Partners provides steady yield, manageable risk, and long-term compounding potential.

- These 10 stocks could mint the next wave of millionaires ›

If you're investing for income, the energy sector still offers something most other sectors don't: durable cash flow tied to real assets.

But not all energy stocks are built the same way.

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Some depend on commodity prices. Others depend on capital markets. A few are structured to generate consistent cash regardless of where fossil fuel prices move.

That distinction is not trivial, and if you're working with a smaller amount of capital, $500, for example, the goal shouldn't be to maximize yield. It should be to minimize risk while maintaining reliable income. Here's why Enterprise Products Partners (NYSE: EPD) perfectly fits that description.

Start with the structure, not the yield

The highest-yielding energy stocks are often the most volatile. They rely on favorable pricing conditions to sustain payouts. And that works until it doesn't.

A better approach is to focus on companies that generate revenue through fee-based contracts rather than commodity exposure.

That's where midstream companies come in.

Image source: Getty Images.

Pipelines, storage assets, and export terminals don't depend on the price of oil or gas. They depend on volume. As long as energy continues to move through the system, these businesses generate cash. And that's a very stable foundation for a dividend. This is the reason Enterprise Products Partners is a solid choice.

The case for Enterprise Products Partners

The numbers make the case for Enterprise Products Partners.

The company generated roughly $8 billion in annual distributable cash flow in 2025, supported by a business where about 80% to 85% of earnings come from fee-based activities rather than direct commodity exposure.

Enterprise Products Partners paid approximately $4.6 billion to $4.8 billion in distributions in 2025, based on $7.9 billion in distributable cash flow and 1.7x coverage reported by the company.

In other words, that cash flow covered the distribution by a wide margin and is well above what most income-focused investors look for.

That consistency shows up in its track record, too.

Enterprise has raised its distribution for more than 25 consecutive years, including through multiple commodity cycles, and currently offers a yield in the 5% to 6% range.

At the same time, it maintains a conservative balance sheet for the sector, with leverage reported at around 3.2x to 3.3x in 2025-2026, allowing it to fund growth projects internally while still returning capital to shareholders.

Why it works as a $500 investment

With a smaller investment, volatility is key.

You don't have the diversification to absorb large swings in income or capital value, and that makes stability more important than upside. Enterprise provides that stability with its predictable cash flow and sustainable payouts.

If you're investing $500, the objective should be clear: reliable income with manageable risk.

For a long-term income position, that's what you want.

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Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.