Retirement investing often forces a difficult trade-off between income safety and income size. Many high-yield options fail to grow, while many growth-focused investments fail to pay. Yet a rare corner of the market is offering something unusual. It combines very high yield, predictable cash flow, and balance sheet strength that meets investment-grade standards. Two midstream energy partnerships are emerging as standout examples of this combination, and they are doing so while remaining widely overlooked.
The appeal is simple and powerful. Both businesses currently offer distribution yields around nine point one percent. Both generate cash flows that are largely shielded from short-term commodity price swings. Both show clear plans to sustain and grow income in the years ahead. For investors seeking durable passive income for retirement, these characteristics are difficult to find in one place.
Below is a detailed look at how these income engines work and why their structure may matter far more than headline oil prices.
Why Near 9% Yield With Stability Is So Rare Today
High-yield investments are common. High-quality income streams are not. In most markets, strong balance sheets and dependable growth command premium valuations, which compress yields. This dynamic explains why sustainable yields above eight percent are increasingly rare.
The opportunities discussed here stand apart because they operate in essential energy infrastructure. Their revenues depend less on energy prices and more on long-term transportation and processing contracts. This model creates steady cash flow even when oil and gas markets become volatile.
Another important factor is balance sheet discipline. Both companies operate within conservative leverage targets and maintain investment-grade credit ratings. That financial positioning allows them to fund growth, absorb market stress, and continue paying income without cutting distributions.
This combination of yield safety and growth potential is the foundation of their long-term appeal.
Plains All American Pipeline Shows How Oil Can Pay Without Price Risk
Plains All American Pipeline operates one of the largest crude oil-focused midstream networks in North America. Its assets are concentrated in the Permian Basin with extensions reaching into Canada. While oil prices fluctuate daily, the company’s cash flows remain far more stable.
Around 85 percent of adjusted earnings before interest, taxes, depreciation, and amortization come from contracts designed to resist commodity price swings. These include minimum volume commitments, acreage dedications, and long-duration transportation agreements. The average contract length is about five years, which provides medium-term revenue visibility.
The balance sheet adds another layer of confidence. Plains All American Pipeline reports a leverage ratio of three point three times, which sits near the lower end of its target range of 3.25 times to 3.75 times. The company holds an investment-grade credit rating and has carefully staggered debt maturities. About $750 million of debt matures this year, which represents roughly 7.5 percent of total long-term debt. After that, no major maturities appear until 2029, and annual maturities remain below $1 billion through 2036, with some debt extending into the 2040s.
Income investors are drawn to the numbers. The partnership offers a next 12-month distribution yield of 9.1 percent. Analyst expectations call for distribution growth of about six percent annually through the end of the decade. Distributable cash flow per unit is projected to grow around 3.7 percent annually over the same period. Importantly, the projected distribution coverage for 2026 stands at 1.55 times, which provides a sizable buffer.
Tax treatment also plays a role. Plains All American Pipeline issues a K-one form, and distributions are typically classified as a return of capital for taxable accounts. Investors who prefer a standard tax form can access similar economics through Plains GP Holdings.
Western Midstream Partners Adds Diversification And Faster Cash Flow Growth
Western Midstream Partners offers a different but equally compelling income profile. Like Plains All American Pipeline, it operates as a master limited partnership and delivers a next 12-month distribution yield of 9.1 percent. Distribution growth is expected to average around three point five percent annually over the coming years.
What sets Western Midstream Partners apart is the speed of cash flow expansion. Distributable cash flow per unit is projected to grow at a compound annual rate of 10.2 percent. Management is intentionally building coverage to strengthen long-term distribution safety even if operating conditions soften.
Commodity diversification is another advantage. The partnership generates revenue from natural gas, crude oil, natural gas liquids, and a rapidly expanding water business. The water segment has gained momentum following the acquisition of Aris Water Solutions. Contract quality remains high with 79 percent of revenue tied to investment-grade counterparties.
Contract structures further reinforce stability. Ninety-five percent of gas contracts and one hundred percent of liquids contracts are fee-based. Weighted average remaining contract life stands at roughly nine years for gas, 7 years for oil, and 8 years for water.
Recent contract modifications with Occidental Petroleum extended certain agreements well into the 2030s. In exchange for a more stable fee structure, Occidental canceled a significant number of Western Midstream units it previously held. While this adjustment may reduce long-term profitability on those contracts, it improves revenue durability.
Financially, the partnership remains strong. It recently achieved investment-grade credit status, carries a leverage ratio of two point eight times, and maintains more than $2 billion in liquidity. About $441 million of debt matures this year, with remaining maturities pushed to 2028 and beyond.
Top Risks for Long‑Term Income Seekers
Despite their defensive cash flow structures, both partnerships remain exposed to short-term market sentiment around energy prices. Unit prices may fluctuate with oil and gas headlines even when underlying cash flows remain stable.
Geographic concentration also matters. Plains All American Pipeline relies heavily on the Permian Basin and crude oil volumes. Western Midstream Partners carries concentration risk as well, but offsets it with exposure across multiple commodities, including water.
Execution risk exists as well. Growth depends on disciplined capital allocation and successful integration of acquisitions. Recent performance suggests management teams are handling this responsibility carefully, but it remains an ongoing consideration.
Income durability matters more than yield headlines. In markets where safe income is increasingly scarce, contract quality, leverage discipline, and coverage ratios determine whether a payout survives downturns. These partnerships illustrate how structure—not speculation—can support high retirement income over time.
