Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Enterprise Products Partners L.P. (EPD): How Safe Is This High-Yield MLP’s Distribution?

Over the last few years, record low interest rates have made Master Limited Partnerships, or MLPs, one of the hottest high-yield equity classes on Wall Street.

While it’s true that this sector has its own risk factors that investors need to be aware of, certain midstream MLPs (those that operate gathering, processing, storage, and transportation infrastructure such as pipelines) can make compelling long-term, high-yield dividend growth investments.

oil, rig, gas, drilling, drill, platform, petroleum, petrol, sea, spill, background, plant, fuel, coast, ocean, gulf, liquid, black, fossil, environmental, derrick, abstract, sky, water,


Let’s take a look at one of the largest midstream MLPs, Enterprise Products Partners L.P. (NYSE:EPD), to see if this high-yield energy stock is one of the few “sleep well at night” or SWAN names in its industry and a potential fit for our Conservative Retirees dividend portfolio.

More importantly, find out if Enterprise’s combination of world class conservative management, strong balance sheet, and solid long-term growth prospects make this a solid core holding for most diversified income portfolios, especially at today’s price.

Business Description

Enterprise Products Partners is North America’s third largest midstream operator, with nearly 50,000 miles of natural gas, oil, natural gas liquid (NGL), and refined product pipelines. Enterprise also owns a number of storage facilities, processing assets, and terminals.

The company’s network of assets helps move different types of energy and fuel from one location to another for upstream exploration and production (E&P) companies. Enterprise primarily makes most of its money from fees it charges E&P customers for its services.

As you can see from the map below, it is tied into America’s largest and most prolific shale oil & gas formations, including the Eagle Ford (east Texas), Permian basin (west Texas), Niobrara (Colorado), and the Marcellus and Utica shale gas fields (Pennsylvania and Ohio, respectively).

Enterprise Products Partners EPD Distribution

Source: Enterprise Products Partners Investor Presentation

Natural gas liquids transportation and processing provides the majority of the MLP’s gross margins, which Enterprise is doubling down on because the shale gas boom has resulted in such an abundance of NGLs (which are used to make plastics) that there is a massive and fast growing export market for refined NGL products such as Ethylene and Propylene in Asia and Europe.

Enterprise Products Partners EPD Distribution

Follow Enterprise Products Partners L.p. (NYSE:EPD)
Trade (NYSE:EPD) Now!

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.