This Overlooked Dividend Sector Is Beating Inflation Better Than Bonds

"For most people, bonds are viewed as the safe income play, but right now, with inflation hovering around 2.7% in December 2025 and the average bond rate hovering somewhere in the mid 3% range according to the U.S. Treasury, the gap is slowly closing between these two ranges. What this means is that after taxes, you're likely just treading water, breaking even, or making a small gain in real terms."

"On the plus side, there is a dividend sector hovering around 6% to 9% yields with built-in inflation protection, but most investors aren't paying attention. Midstream energy partnerships operate toll-road businesses that move oil and gas through pipelines, and their revenue comes from volume-based fees, not commodity prices, which means steady cash flow no matter if oil is $50 or $90 a barrel."

"The shift toward midstream partnerships makes sense when you start to look at what bonds can't deliver right now. Fixed payments don't adjust for inflation, and when rates rise, bond values fall. Midstream MLPs can solve both problems by generating a new stream of cash flow tied to economic activity and energy demand, which tends to rise with inflation. If you're okay navigating a K-1 come tax time, the income advantage over bonds is not just substantial, it's growing."

Inflation near 2.7% and average bond yields in the mid-3% range leave after-tax bond returns close to zero in real terms. A dividend sector yielding 6% to 9% provides built-in inflation protection that many investors overlook. Midstream energy partnerships act like toll roads for oil and gas, earning volume-based fees that are not tied to commodity prices and deliver steady cash flow regardless of oil price swings. Midstream MLPs generate cash tied to economic activity and energy demand, often raise distributions annually, and present a sizable income advantage over bonds for investors willing to handle K-1 tax reporting. Enterprise Product Partners is cited as an example with a 6.26% dividend yield and a $2.20 annual payout as of February 10, 2026.

Read at 24/7 Wall St.