Do you want sustainable dividend income that can last for decades? Buy this stock and never look back.

The energy sector is ripe with both high-dividend stocks and consistently paying producers. To the delight of income-hungry investors, some stocks fit both bills.

A good place to find high-yield dividend producers in the energy sector is the midstream space, home to master limited partnerships (MLPs) and pipeline stock. the middle of the stream is littered Famous Income PowerhouseInvolved enbridge And energy transferAmong others, but some less publicized names are also worthy of investors’ attention. enter MPLX LP (MPLX 0.33%).

For those who are not familiar with this pipeline operator, it has been separated Marathon Petroleum in 2012 and continued to manage Marathon’s pipeline assets. Investors evaluating MPLX need to take the marathon relationship into account because it is, in a word, additive. It is rooted in long-term contracts that drive highly visible cash flows, which are important when assessing this energy stock and its 7.3% dividend yield.

The Marathon partnership is important and is an ingredient in the MPLX dividend recipe. Still, there’s a lot more to like about MPLX, and those other ingredients suggest it could be a sustainable dividend stock for long-term investors.

Focus on deal-making

not all energy reserves Deal-making pays, but MPLX is a prime example of a company that knows how to execute on that front. Last year, the midstream organization made three purchases, spinning off its Rocky Mountain business. This narrows the company’s focus (in a good way) to the Marcellus and Permian shale fields.

Investors turning to MPLX with a long-term perspective may find those areas of emphasis attractive for a number of reasons. The acquisitions deepening MPLX’s Permian footprint enable the energy company to strengthen its drill-to-Gulf Coast proposition while strengthening its natural gas liquids (NGL) exposure.

Long-term investors should not overlook MPLX’s place in the NGL ecosystem. From this year to 2035, the NGL market is expected to nearly double, growing at a compound annual growth rate of 7.1%. North America is the world’s largest NGL market, and liquefied natural gas (LNG) exports are growing, and they are at the top of the White House’s US energy independence agenda. So while MPLX is not 100% pure-play Liquefied Natural Gas StockIts angle on that corner of the energy sector could be a contributor to long-term share price appreciation.

today’s change

(-0.33%) $-0.19

current price

$56.97

key data points

market cap

$58BMarket cap is calculated using only publicly traded shares outstanding. It does not include unlisted, private, or dual class non-traded shares. Implied market cap may vary.Market cap is calculated using only publicly traded shares outstanding. It does not include unlisted, private, or dual class non-traded shares. Implied market cap may vary.

day limit

$56.83 -$57.70

52wk range

$47.80 -$59.98

volume

796.1K

average volume

2M

gross margin

44.12%

dividend yield

7.32%

There’s also an artificial intelligence (AI) angle here. Yes, these days it definitely feels like many non-tech companies have “AI hooks,” but in MPLX’s case, the energy firm is AI-relevant. The logic is simple. This is the Marcellus, and the Permian footprint is favorable in the data center expansion scenario because natural gas is abundant and cost-effective. This is exactly the type of energy data center one wants.

More gas in the tank of this dividend

Experienced energy investors know that dividends are one of the primary reasons to consider pipeline stocks, but it’s not just about what an operator pays today. It’s about what they can deliver next year and in the years to come.

MPLX easily answers the call for payment growth. A 12.5% ​​dividend increase announced by the company last October boosted the annual distribution to $4.31 per share, meaning it has increased nearly 10 times in just 11 years. The company is targeting 12.5% ​​distribution growth by 2027, which means compounding dividends.

Skeptical investors may think that MPLX’s dividend outlook sounds too good to be true. While some investment skepticism is warranted, there is good news with MPLX: Its dividend doesn’t burden it. Its debt-to-equity ratio is 1.8, and its $5 billion in liquidity can cover about two years of expenses based on current rates. In the first quarter, MPLX generated $549 million in free cash flow, leading to distribution coverage of 1.3x. So the dividend is safe with a solid foundation for long-term growth.