Diversifying Energy for Income and Growth in 2026

Core Viewpoint - The current oil outlook for 2026 suggests a supply surplus, leading to muted prices, which may prompt investors to diversify their energy investments beyond traditional oil and gas producers [1][2]. Energy Investment Strategy - A strategy proposed by industry experts includes focusing on energy infrastructure and nuclear power to capture yield and growth [3]. - Midstream Master Limited Partnerships (MLPs) are highlighted as a defensive anchor for energy portfolios in 2026, as they operate on fee-based business models rather than being solely dependent on commodity prices [3]. - Midstream equities currently offer attractive yields supported by strong free cash flow and consistent dividend growth [3]. Infrastructure and Demand - Midstream assets are essential for supporting the increasing electricity demand driven by data centers, making the infrastructure for transporting natural gas critical [4]. - The Alerian MLP ETF (AMLP) tracks the Alerian MLP Infrastructure Index (AMZI), which had a yield of 7.7% as of December 8 [4]. Nuclear Energy Growth - Nuclear energy is identified as a key beneficiary of the tech sector's need for reliable, carbon-free baseload power, complementing the income from midstream investments [5]. - The Range Nuclear Renaissance Index ETF (NUKZ) is suggested for investors looking to gain exposure to companies involved in advanced reactors, utilities, construction, and services related to nuclear energy [6]. Combined Investment Approach - By integrating the stability of midstream investments with the growth potential of nuclear energy, advisors can create an energy allocation strategy that is less reliant on oil prices [6].