Invest in Enterprise Products Partners for High and Stable Income

Enterprise Products-Appealing for those Seeking Income and Growth

In this video, Chuck Carnevale, co-founder of FAST Graphs, aka Mr. Valuation presents a detailed analysis of Enterprise Products Partners (EPD), a midstream master limited partnership (MLP) known for its high income potential, offering investors a stable and growing dividend yield. With 21 years of consistent dividend increases, Enterprise Products is appealing for those seeking income and growth, although its MLP structure comes with unique tax implications, which should be reviewed with an accountant.

The company’s earnings may not fully cover its dividend, but its strong cash flow from long-term contracts and capital investments, including acquisitions and pipeline expansions, help sustain and grow distributions. Despite the capital-intensive nature of its business, Enterprise Products has maintained its dividend through strategic use of debt and equity without excessively issuing stock. It has a solid balance sheet with an A- credit rating and healthy margins.

Chuck emphasizes the importance of valuation when investing in such income-focused stocks, recommending purchasing during undervalued periods to maximize returns. Currently, Enterprise Products is trading at a price-to-operating cash flow below its historical average, presenting an opportunity for long-term investors seeking high, sustainable yields and modest capital appreciation.

However, investors should consider tax factors and consult their tax advisors when investing in MLPs.