Key Points
Enbridge and MPLX are midstream operators.
Both companies offer above-average dividend yields.
Both stocks have outshone the S&P 500 so far this year.
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Companies that are particularly heavy users of oil-derived fuels, such as transportation businesses and airlines, have had a rough time lately due to the steep climb in crude oil prices since mid-February. Midstream energy operators -- which own oil and natural gas pipelines and other related infrastructure -- are somewhat insulated against changes in commodity prices.
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That's because they charge preset fees for the use of their pipelines to transport crude oil, natural gas, and other refined products -- and those fees are based on volumes, not values. They serve the energy industry itself, so they aren't as affected by the boom-and-bust cycles in energy prices.
The shares of Enbridge (NYSE: ENB) and MPLX (NYSE: MPLX) have underperformed other midstream operators so far this year, but both are worth buying for their long-term performance and high dividends. But which is the better buy right now?
Image source: Getty Images.
MPLX is stronger on taxes and over the long haul
The two companies differ in their structures. Enbridge is a Canadian corporation with broad diversification, while U.S.-based MPLX is a master limited partnership (MLP) that was formed by Marathon Petroleum.
MLPs offer certain tax advantages in the U.S. because MLP unitholders (the MLP equivalent of shareholders) may be eligible for a 20% deduction on qualified business income, lowering the effective tax rate on distributions compared to the standard dividend tax rates applied to a company like Enbridge.
While Enbridge has delivered a total return of more than 14% so far this year, and MPLX's total return is just above 12%, MPLX has outperformed Enbridge over the past three years with a total return of more than 123% compared to just over 80% for Enbridge.
MPLX is demonstrably a better value right now
MPLX is trading at a price-to-cash-flow ratio of 14.6, which not only makes it substantially less expensive than Enbridge at about 44, but also lower than other leading midstream operators in the U.S. It also has a better dividend yield of around 6.1% to around 5% for Enbridge at their current share prices.
Enbridge has a longer streak of dividend raises -- 31 consecutive years. But that's down to the fact that it's an older company. MPLX was founded in 2012, and has raised its regular dividends annually ever since. (It did make a special distribution in 2021 that boosted its total payout that year, but such one-time events don't detract from the company's streak of hiking its ordinary quarterly distributions.)
However, in recent years, Enbridge's dividend increases have slowed to about 3% annually, including a 2.6% increase this year.
In contrast, MPLX has delivered double-digit percentage hikes (often 10% to 12.5%) for several consecutive years, offering much higher "yield on cost" potential. It raised its dividend by 12.5% in 2024 and 2025.
MPLX has better margins and a stronger balance sheet
As of the end of 2025, MPLX had a total multiple of debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) of 3.7, compared to 4.8 for Enbridge. Last year, MPLX reported adjusted free cash flow of $1.6 billion, up 18.3%, while Enbridge's adjusted free cash flow was $12.5 billion, up 3.8%.
MPLX, thanks to its tight relationship with its parent, Marathon Petroleum, has a profit margin of more than 41%, while Enbridge's margin is closer to 12%.
MPLX's greater profitability and lower debt load give it more flexibility to fund share buybacks or projects that can provide organic growth. In 2026, it said it planned to spend $2.4 billion to expand its natural gas and natural gas liquids assets, mainly in the Permian and Marcellus basins in the U.S. It also is looking at acquisitions that fit in with its operations.
While both stocks are attractive, MPLX holds the edge due to its dividend yield, its profitability, and what appears to be a better valuation than Enbridge.
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James Halley has positions in Enbridge. The Motley Fool has positions in and recommends Enbridge. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
