Enterprise Products Partners (EPD) has a history of consistently increasing its distribution payments for the past 25 years, despite fluctuations in energy prices and economic cycles. The current distribution yield is 7.3%, making it an attractive option for income-seeking investors. The company recently reported solid first-quarter results, demonstrating the reliability of its business model. Despite this, EPD will soon enter a period of growth, which should please investors further. In fact, the company plans to spend between $3.25bn and $3.75bn on growth projects in both 2024 and 2025. This includes $6.9bn worth of projects currently under construction, many of which are due to come online in 2025 and beyond. This growth is expected to result in an additional $455m in annual gross operating profit, with a return on invested capital of around 13%. EPD is trading at an attractive valuation, considering its historical levels, while its recent acquisition of a deepwater port license for its proposed Sea Port Oil Terminal (SPOT) could further boost its status as a major player in crude exports. The stock’s forward enterprise value to adjusted earnings before interest, taxes, depreciation, and amortisation (EV/EBITDA) multiple is currently just over 9x, compared to over 15x before the pandemic. As such, now appears an excellent time for dividend investors to purchase shares in EPD. Before investing, however, it is recommended that readers carefully review The Motley Fool’s analysis, which suggests that there may be better options available. Nonetheless, EPD’s impressive track record of distribution increases, combined with its forthcoming growth prospects, places it in a strong position.
In summary, EPD’s reliable distribution payments, upcoming growth projects, and attractive valuation make it a promising dividend stock for investors. However, readers are advised to conduct thorough research before making any investment decisions.
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