6 Midstream C-Corps Ranked: The Right Pipeline Stock For Every Portfolio

I have been looking forward to writing this article, as we'll discuss a lot of fascinating things. As the title of this article already gave away, it's about midstream companies. More specifically, it's about C-Corp midstream companies. These are the owners of pipelines and related energy support infrastructure that is structured as a normal C-Corp. This means they issue standard 1099s instead of Schedule K-1 tax forms. While some really like K-1s (others hate them), they tend to be very tricky investment vehicles for non-American investors and everyone trying to avoid K-1 forms, for whatever reason. The reason I am writing this article now is that I discussed Williams Companies (WMB) with some readers last week. Instead of writing an in-depth article on WMB, I decided to do things differently and give readers a full breakdown of the largest C-Corps. Not only do I love midstream because of major secular growth trends like LNG exports and the data center buildout that requires a lot of energy, but also because it's a great source of income and even buybacks after many companies started to deleverage their balance sheets. Before the pandemic, the industry was still in an aggressive buildout that often resulted in negative free cash flow. While these companies are still investing in growth, they are now also enjoying the benefits of past investments that are profitable. Unfortunately, finding the right stocks in this space is tricky. For most, it's nearly impossible. That's what this article is about, as I am approaching the C-Corp midstream space with a >10-year horizon. To identify the ultimate long-term winners, we have to strip away the noise of near-term EV/EBITDA multiples and starting dividend yields. As much sense as it may seem to make to focus on income first, we have to evaluate these operators through a lens of absolute permanence and quality first before we do anything else. Here, my TOLL framework comes in handy, especially if we combine it with a rating system. If we want to own companies that will come with premium valuations and print free cash flow in 2036 and beyond, we have to prioritize: Tangible Assets (20 pts): Hard, physical infrastructure. We are measuring the replacement efforts and the geographic scarcity of the physical footprint. Oligopoly (20 pts): The barrier to entry. We want to see massive regulatory red tape, right-of-way monopolies, and a complete lack of viable alternatives, which grant the operator strong pricing power. Low Incremental CapEx (20 pts): The ability to grow capacity and compound free cash flow without massive new capital expenditures. We favor low-cost brownfield add-ons over capital-destroying greenfield construction. Long Duration Cash Flows (20 pts): Cash flow visibility extending into the 2030s, supported by fee-based, take-or-pay contracts that insulate the business from spot commodity volatility. (This makes it a TOLL+ framework) Macro Thematic Alignment (20 pts): How perfectly the asset captures the biggest tailwinds of the coming decade, specifically AI grid electrification, LNG exports, and basin consolidation. Source: GNG Research In recent days, I built a very extensive rating framework based on countless variables that I fed to AI, all combined with my personal thesis on the energy/data center buildout and the qualitative aspects that make these midstream stocks special. It is truly the most extensive and in-depth comparison article I've ever written. Also, and this is very important to mention, this isn't a comparison based on financials alone. As I briefly mentioned in the paragraph above, it is a qualitative scoring comparison, as I look into what makes these companies special. That's what sets this comparison apart from a simple numbers comparison. Based on that context, filtering the premier midstream C-Corps through this rigorous scorecard leaves us with six titans. Now, it's time to dig into the numbers, the newl