Enterprise Products Partners L.P. (NYSE:EPD) closed at $36.82 on October 16. The stock has returned -0.2% during the last 6 months, compared to a 10.5% return for the Insider Monkey Billionaire Index and 9.3% for the State Street SPDR S&P 500 ETF Trust.
Enterprise Products Partners declared a quarterly distribution of $0.56 per unit on October 8, which works out to $2.24 a year. That is 2.8% more than it paid for the same quarter a year earlier. The declaration is routine. What is not routine is the price. A business of this size and this record still trades at a strikingly low multiple, and the reason has little to do with the pipelines.
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What the Units Actually Buy:
Enterprise is one of the largest publicly traded partnerships in American energy. It owns pipelines, storage, and export terminals spanning natural gas liquids, crude, and petrochemicals. Most of what it earns is a fee for moving or storing someone else’s product.
The balance sheet is unusually light for the sector. Debt against equity comes to 109.97%, well under what midstream routinely carries.
Enterprise is the only partnership in our 10 Best Pipeline and MLP Stocks to Buy According to Hedge Funds, and it is the cheapest name on that list. To see the nine corporations around it, click HERE.
Why So Few Institutions Hold It:
A partnership sends its owners a K-1 at tax time rather than the 1099 a company sends. That form creates filing obligations many professional investors are not set up to handle.
The effect is a buyer base narrower than the business deserves. It is not a judgement about pipelines. It is paperwork, and paperwork does not improve when earnings do. The slower risk is the one the sector shares. Volumes depend on how much oil and gas comes out of the ground, and an export-weighted business also depends on customers abroad continuing to buy it.
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Cheap for a Reason That Is Not About the Assets:
The yield is 6.08%, and the units change hands at 11.89 times what analysts expect next year. Those are generous terms for assets of this quality, and the balance sheet behind them is light.
A discount usually signals doubt about the assets. Here it signals who is allowed to buy them. An investor who can file the form is paid for the inconvenience, and that payment is the entire argument. Not every income buyer can file the form. 10 Best Utility Dividend Stocks To Buy has names that pay well and send an ordinary tax slip.
Conclusion:
The distribution rose, the borrowing is lighter than most of the sector carries, and the units are still the cheapest way to own pipelines of this quality. What explains the gap is a tax form rather than anything about the assets. That is an unusual reason for a stock to be cheap and a fairly durable one, because the form is not going away. Whoever can live with the filing collects more income for the same pipe. Watch export volumes, because that is the part of the business most exposed to someone else’s decision.
Market Sentiment:
Enterprise Products Partners L.P. was held by 32 hedge funds with a combined stake value of about $473 million at the end of Q2 2026 in the Insider Monkey database. This is unchanged from 32 hedge fund holders in the previous quarter.
While we acknowledge the risk and potential of EPD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EPD and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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This article is originally published at Insider Monkey.
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