Midstream energy infrastructure overview and benefits

Midstream energy infrastructure companies are engaged in the transportation, storage, gathering, processing, and distribution of natural gas, natural gas liquids, crude oil, and other hydrocarbons. Midstream assets, situated between the well head and end consumer, represent a “must-run” link and earn a fee or fee-like margin based on volume rather than commodity price.

We believe that energy infrastructure investments offer an attractive risk/reward proposition with potential increasing distribution growth and attractive current income supported by healthy fundamentals. In our view, these companies are positioned to continue to benefit from structural tailwinds as demand expectations for natural gas increase.

Learn more with Invesco’s SteelPath energy infrastructure team in this video series.

Midstream energy infrastructure offers several potential advantages for investors:

Stable cash flows

Midstream companies typically generate stable and predictable cash flows due to long-term contracts and fee-based revenue models based on volume rather than commodity price. Our quarterly infographic “The state of the midstream energy infrastructure sector” provides updated fundamentals, including free cash flow yield and valuations.

Attractive yields

Backed by their fee-based business model, the midstream asset class has typically provided compelling yields compared to other yielding asset classes such as real estate, utilities or fixed income.

Growth potential

The sector is experiencing healthy tailwinds as demand for natural gas and liquified natural gas (LNG) is meaningfully increasing and expected to continue to do so, driven by volume growth for data centers to power artificial intelligence and natural gas exports. Read more in “Natural gas demand expectations continue to increase, supporting our midstream growth outlook.”

Resilience to market volatility

Historically, midstream equities have shown resilience compared to broader markets during periods of economic uncertainty. This stability is partly due to the essential nature of energy infrastructure. To learn more about our analysis, read “Midstream fundamentals vs. tariffs and market turmoil.”

The Invesco SteelPath team provides a monthly update for the midstream sector including performance, news and a “Chart of the Month”. Read our current commentary in “SteelPath commentary on the midstream energy infrastructure industry.”

Overall, midstream energy infrastructure may be a compelling investment option for those looking for attractive income and growth potential, while also considering the sector-specific risks.