This pipeline stock pays a 5% yield -- here are 2 more like it

The energy sector is ripe with interesting dividend opportunities. Still, experienced investors know that high-yield pipeline stocks are among the best places to be for dependable midstream energy income.

Due to perceived safety and familiarity, income-hungry market participants perusing the midstream often embrace large-cap names, including the three E's: Enbridge (NYSE: ENB), Energy Transfer, and Enterprise Products Partners. Focusing on the $123.2 billion Enbridge for a moment, investors' adulation for that pipeline giant is understandable. It's a large-cap stock with a dividend yield of 4.9%.

Those are appealing numbers, ones that imply a level of comfort craved by many dividend investors. However, market participants willing to go further down the midstream market capitalization spectrum can be rewarded with both significant payouts and upside potential.

The unheralded duo of Hess Midstream (NYSE: HESM) and Western Midstream (NYSE: WES) confirm as much.

All hail Hess

A couple of things explain Hess Midstream's overlooked status. First, the company has a market value of $8.3 billion, making it a mid-cap stock, and the investing public consistently overlooks that segment. Second, while many midstream players focus on the Permian Basin or the Gulf Coast region, Hess does not.

Rather, this pipeline operator controls gas, oil, and water assets in the Bakken and Three Forks shale regions of North Dakota. Geography doesn't alter the fact that this energy stock carries an impressive dividend yield of 7.7%. Oh yeah, it's a payout grower, too. In January, Hess Midstream announced a distribution increase while noting that its free-cash-flow growth through 2028 should support dividend growth of at least 5% annually.

As its name implies, Hess is, in fact, a midstream company, but investors who aren't yet familiar with this name should note this operator doesn't compare on an apples-to-apples basis with Enbridge. Hess is fully vertically integrated within one basin and is highly dependent on its relationship with Chevron.

In the first quarter, Hess derived 96% of its revenue from Chevron contracts. On the surface, that sounds risky, but some of the risk is defrayed on multiple fronts. First, Hess isn't taking on commodity price risk. Second, while there is some volume risk here, the company has sturdy minimum-volume commitments with Chevron, which provide clarity for investors. Investors don't seem to mind the Chevron relationship, as Hess Midstream's shares are up 16.2% this year.

Winning with Western Midstream

From an income perspective, Western Midstream is another energy stock that deserves more attention. This $18.8 billion company delivers the dividend goods, as evidenced by its 8.1% yield. More importantly, the Permian Basin operator has a five-year streak of dividend increases to its credit.

Western Midstream forecast 2026 distributable cash flow of $1.85 billion to $2.05 billion, and first-quarter operating and maintenance expenses declined by 7%, implying this payout is on solid ground. The potential long-term upside for both the dividend and the stock is supported by the operator's enviable position in the Delaware Basin. Not the state of Delaware, but one of the most lucrative portions of the broader Permian Basin.

In the first quarter, the company produced a record amount of oil and natural gas liquids (NGLs) in the Delaware Basin. Western paid $1.6 billion for Brazos in a deal aimed at fortifying the buyer's position in the Delaware Basin. That deal, which closed last month, could add as much as $100 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) this year while transforming Western into a must-have partner for Permian drillers.

Investors looking for another reason to consider this stock may want to examine the $1.5 billion acquisition of Aris Water Solutions, completed last October. That deal positions Western as one of the leading water providers in the Permian Basin, potentially giving it a durable competitive advantage over rivals that focus more on energy storage and transportation.

Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron and Enbridge. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.