MLP distributions up 10.1% in 2025 as leverage falls

VettaFi’s index-level charts show the Alerian MLP Index’s annual normalized distributions increased 10.1% in 2025. The firm’s methodology compares annualized normalized total distributions for index constituents year over year. On the first trading day of 2025 the index had an indicative yield of 6.86%; actual normalized distributions rose 10.10% by year end. The Alerian MLP Infrastructure Index, a subset of the broader index, followed similar payout patterns.

Distribution gains in 2025 were broad based across midstream master limited partnerships. Companies reduced leverage, generated stronger free cash flow and returned capital through buybacks while maintaining or increasing payouts. Enterprise Products Partners and MPLX each represented roughly 10% of the index weighting and did not cut distributions during the period. Since 2021 there was one distribution suspension among index constituents when USD Partners suspended its payout in the first half of 2023.

Leverage metrics improved across the sector over the past decade. Net debt to adjusted EBITDA for many midstream companies moved from around 5x a decade ago to a range of about 3x to 4x today. By June 30, 2025 the index was 65.5% investment-grade by weighting. The broader midstream sector finished 2025 with an average leverage ratio of 3.8x.

Some companies recorded higher leverage in 2025. Plains All American’s leverage increased; the company expects to move back toward the middle of its 3.25–3.75x target range after completing a Canadian natural gas liquids divestiture. MPLX’s leverage rose from approximately 3.1x to 3.7x following its Northwind Midstream acquisition, with new debt recorded before a full year of earnings from the asset. Most large MLPs reported leverage within or near their stated target ranges at year end.

Most index companies have guided to mid-single-digit annual distribution increases over the next several years, citing long-term fee-based contracts, continued free cash flow growth and lower leverage as supports for future payouts. The Alerian MLP Index and its infrastructure subset serve as benchmarks for multiple exchange-traded products tracking midstream MLP performance.