The Ultimate High-Yield Stocks to Buy With $1,000 Right Now

"If you have $1,000 to invest and are looking for reliable high-yield stocks, then look at the energy industry."

That's a statement that nobody would expect to hear given the inherent volatility of oil and natural gas prices. The key is that you need to focus your attention on the midstream sector, which operates very differently from energy producers and processors. Here's why Enterprise Products Partners (NYSE: EPD) and Enbridge (NYSE: ENB) are the ultimate place to invest $1,000 if you're in search of high-yield stocks.

Three ways to play in the energy patch

When most people think of the energy industry , they are generally thinking about companies that drill for oil and natural gas. These enterprises, however, only represent one segment of the overall energy sector. These "upstream" companies have somewhat unstable businesses because their income is dependent on the prices of the commodities they produce, which can be highly volatile. This is actually a problem in the "downstream" segment of the energy sector, too.

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The downstream is where refiners and chemical manufacturers are lumped together. They use oil and natural gas to create other products, like gasoline. But a lot of the time the products downstream companies produce are commodities, so there's pricing volatility on both sides of the business. Once again, the view that energy is a volatile business is spot-on.

But the "midstream" segment of the energy sector is very different. Midstream companies like Enterprise and Enbridge own things like pipelines , which help to move oil and natural gas from where it is extracted to where it gets used. Usually midstream companies charge fees for the use of their assets, which means that the price of what's flowing through their systems is less important than demand for energy. Energy demand tends to remain fairly constant regardless of energy prices because the modern world would screech to a halt without oil and natural gas.

Enterprise Products Partners is a high-yield MLP

This is how Enterprise has been able to increase its distribution -- the partnership equivalent of a dividend -- annually for 25 consecutive years. That's a pretty incredible streak in the energy sector, especially when you pair it with a huge 7.1% distribution yield. But don't think that the high yield here is a sign of risk.

Enterprise's distributable cash flow covers its distribution by a healthy 1.7 times. That means it could endure a decent amount of adversity before a distribution cut would be in the cards. The master limited partnership's (MLP) balance sheet is also investment grade, so the income you generate from owning it is built atop a strong financial foundation.

There's two caveats. First, the yield is likely to make up the vast majority of your return. Distribution growth will probably be in the low- to mid-single percentage digits. But if you are looking to maximize income, that probably won't be a problem. Second, as an MLP, Enterprise is a bit more complicated come tax time (you'll have to deal with a K-1 form , for example).

Enbridge is the Canadian alternative

If you don't want to deal with the MLP angle, then you might want to examine Enbridge. Like Enterprise, Enbridge is one of the largest midstream companies in North America. But it isn't structured as a master limited partnership. That simplifies things a bit (more on this below).

Enbridge has raised its dividend for 29 consecutive years. That streak has been built atop an investment-grade balance sheet. The yield is an even more enticing 7.5%. That said, Enbridge hails from Canada and pays its dividend in Canadian dollars. The actual dollar value of the dividends that U.S. investors collect will change with exchange rates. And U.S. investors will have to pay Canadian taxes on the dividends, which can generally be claimed back come tax time. So there's less tax complexity, but you don't completely avoid it.

Another nuance with Enbridge is that its portfolio of infrastructure assets is a bit broader, including oil pipelines, natural gas pipelines, natural gas utility operations, and clean energy assets. If you want an energy sector focus, it isn't a pure play. But if you don't mind owning a company that is actually shifting its business along with the changing global energy landscape, then it might be even more attractive than you thought.

Maybe "ultimate" is hyperbole, but these are great options

There's no single best investment option for every investor, so it's hard to suggest that Enterprise and Enbridge will work for everyone. But if you are looking for reliable income stocks, these two midstream giants have proven they are industry leaders that know how to reward investors well through the energy cycle. It's hard to complain about that fact when you combine it with 7% yields!

Reuben Gregg Brewer has positions in Enbridge. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy .