America’s Energy Advantage: 2 High-Yield Picks Paying Up to 12%

Why U.S. Energy Investments Look Attractive in 2026

U.S. energy production, growing exports, and rapidly rising electricity demand are creating new opportunities for income investors. Two investments stand out: Kimbell Royalty Partners (KRP), yielding 12.5%, and Energy Transfer (ET), yielding 6.5%. Both recently raised their quarterly distributions, but they provide exposure to different parts of America's energy economy.

KRP gives investors exposure to U.S. oil and natural gas production through its portfolio of mineral and royalty interests, while ET owns the infrastructure needed to gather, process, transport, and export these commodities.

The backdrop is increasingly favorable. AI data center energy demand is driving new electricity consumption, while growing U.S. energy exports and geopolitical tensions are highlighting the importance of reliable domestic energy supplies. The Strait of Hormuz remains severely disrupted, affecting a critical route that normally carries oil volumes equivalent to roughly 20% of global petroleum liquids consumption.

For income investors, this creates an interesting opportunity: participate in the growth of America's energy economy while collecting substantial cash distributions along the way.

Kimbell Royalty Partners: A 12.5%-Yielding Royalty Investment 

Kimbell Royalty Partners (KRP) owns mineral and royalty interests across 17 million gross acres in 28 states, providing diversified exposure to U.S. oil and natural gas production. During Q2, KRP achieved record production of 25,830 Boe/d, while its recent Mesa Royalties acquisition increased run-rate production to 26,967 Boe/d.

KRP continues to expand production from its acreage through acquisitions, recently announcing another $215.4 million royalty acquisition across several major U.S. basins. These transactions reinforce KRP's position as a leading consolidator of U.S. royalty assets.

Q2 Investor Presentation (August 2026)

The company declared a $0.47/unit Q2 distribution, representing a 14.6% sequential increase, while maintaining a conservative 1.4x leverage ratio. We will note that KRP pays variable distributions depending on production volumes and commodity prices, both of which will remain important drivers of future payouts.

Given the new acquisition, we expect management to raise its annual run-rate daily average production guidance. The equation goes like:

More Acreage + More Drilling + More Production + Higher Commodity Prices = More Royalty Cash Flow. 

Due to these tailwinds, we project over $1.90/unit in annualized distributions, calculating to a 12.5% yield at $15.11/share as of market closing on August 13th.

Risks Income Investors Should Understand

KRP's 12.5% yield comes with an important distinction: the distribution is variable. Unlike a company with a fixed quarterly dividend, KRP's payout can rise or fall depending on production volumes, commodity prices, and the cash available for distribution.

This makes KRP different from a traditional dividend stock. Investors should not assume today's high-yield will remain unchanged. The same commodity exposure that can support higher payouts when oil and natural gas prices are favorable can work against investors when prices or production decline.

However, KRP's royalty model provides an important advantage over traditional upstream producers. The company generally does not bear the drilling and operating costs associated with developing the wells on its acreage, allowing it to participate in production without taking on the same capital requirements as an exploration and production company.

Energy Transfer: A 6.5%-Yielding Midstream Powerhouse

Energy Transfer (ET) is one of the largest and most diversified midstream operators in North America, with exposure to natural gas, NGLs, crude oil, and related infrastructure. ET reported record Q2 results, with midstream gathering volumes up 4% YoY, NGL transportation volumes up 13%, NGL export volumes up 25%, and crude oil transportation volumes up 4%.

Data centers require enormous amounts of electricity, and natural gas is increasingly important for supplying that power. This creates opportunities for ET across multiple parts of its network, including natural gas gathering, transportation, processing, and infrastructure providing energy supplies to power generators. ET is the only major midstream company working directly with utility and technology companies to support power generation and data center demand. At the same time, growing LNG and NGL exports create additional demand for the infrastructure connecting U.S. production to international markets.

ET diversified commodity exposure is resulting in tailwinds from strong demand for U.S. energy exports, while its growing infrastructure footprint is increasingly positioned to benefit from rising natural gas demand for power generation and data centers. Around 90% of ET's adjusted EBITDA comes from fee-based operations, providing greater cash-flow stability during periods of commodity-price volatility

ET reported $5.1 billion of Q2 adjusted EBITDA and $2.6 billion of distributable cash flow, providing strong 2.2x coverage for its distribution. The partnership recently raised its quarterly distribution by 3% YoY to $0.34/unit, representing a 6.5% annualized yield at $20.76/unit as of market closing August 13th. Management continues to target 3%-5% annual distribution growth, supported by its extensive infrastructure expansion.

Important Considerations

As a master limited partnership, ET issues a Schedule K-1 rather than a standard 1099-DIV, which is an important tax consideration for investors. 

Why These Two Now?

We like KRP and ET for different reasons, but the two companies complement each other particularly well. KRP provides a clean mineral royalty exposure to U.S. hydrocarbon production, without the operating costs and overhead that drillers face, while ET provides exposure to the infrastructure required to move, store, and process them.

For Kimbell, continued drilling activity across its acreage can drive production and royalty revenue. For Energy Transfer, increasing production, growing LNG exports, and expanding electricity demand create opportunities for its integrated infrastructure network.

America's growing data center economy is creating a new source of domestic electricity demand, while the nation increasingly plays an important role in global energy security. For income investors, we find this particularly attractive because we're not simply betting on higher commodity prices. We're investing in businesses that can generate durable cash flows from a global necessity.

At High Dividend Opportunities, we believe the best investments don't require investors to predict every twist and turn in the market. Instead, we look for businesses with durable assets, strong cash generation potential, and the ability to return meaningful amounts of that cash to shareholders. HDO is the largest Investing Group on Seeking Alpha and the #1 choice for income investors and retirees.

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With both companies discussed today recently raising their distributions, we believe KRP and ET offer two compelling ways for income investors to participate in America's growing energy economy while getting paid to wait.