My 1 Favorite Income Stock to Buy Right Now in the Energy Sector

• MLPs can be good for dividends because they generate steady cash flow from long-term contracts and pass a majority of profits directly to investors through regular distributions.

• Energy Transfer is an MLP and pipeline operator with a 7.5% dividend yield.

• The company has secured contracts with hyperscalers that are looking to secure fuel for their growing data centers.

• 10 stocks we like better than Energy Transfer ›

If your goal is to generate income from your investment portfolio, Energy Transfer (NYSE: ET) is a top stock to consider. With a 7.5% dividend yield, the gas pipeline operator provides income and has upside potential amid strong demand from hyperscalers for natural gas needed to fuel on-site generators that help provide consistent power to their data centers.

With positive momentum heading into 2026, here’s why Energy Transfer is my favorite dividend stock in the energy sector today.

The build-out of artificial intelligence (AI) data centers is underway, and it directly benefits Energy Transfer as it integrates its natural gas network directly with major hyperscalers.

Midway through last year, Energy Transfer scored multiple agreements with Oracle to supply natural gas to three of the hyperscaler’s data centers, two of which are located in Texas. As part of the deal, the company would deliver about 900,000 one thousand cubic feet (Mcf) per day through a lateral pipeline connecting to its Hugh Brinson and North Texas pipelines.

It also entered into a 20-year binding agreement with Entergy Louisiana, and will provide 250,000 metric million British thermal units (MMBtu) per day of firm transportation service starting in December 2028. The capacity will supply fuel for Entergy’s power generation facilities in North Louisiana, supporting Meta Platforms‘ new data center in Richland Parish.

Beyond this, Energy Transfer has contracted over 6 billion cubic feet (Bcf) per day of new pipeline capacity with demand-pull customers (utilities and data centers) in the last year alone. These contracts have a weighted average life of 18 years and are projected to generate more than $25 billion in future revenue from long-term firm transportation fees, helping secure predictable cash flow and drive earnings growth over the next decade.

One area to keep an eye on is the rising competition for Permian natural gas liquids (NGL). Rivals like Targa Resources and Enterprise Products Partners are creating new capacity, and NGL fees are becoming “more and more tight and more competitive,” according to CEO Marshall McCrea.