Enterprise Products Partners is a large North American medium -stream operator.
The Master Limited partnership has a huge yield of 6.8%.
In three years, the distribution will probably be more bigger, as billions of dollars investments are beginning to bear fruit.
Partners of Enterprise Products(Nyse: EPD) is a leading player in the northern sector in the North American Middle Stream. Using a taxi model, Master Limited Partnership (MLP) tends to be a pretty boring business.
But this is a function, not a mistake when you note that it has a well -abnormal market 6.8% distribution yield. After three years, Enterprise Products partners will probably be as attractive as today if your income is your goal. That is why.
Where to invest $ 1,000 right now? The team of our analyst has just revealed what they believe they are 10 best shares To buy right now. Continue »
Enterprise Products Partners has energy infrastructure, including things such as pipelines, storage, processing and energy transport assets. These are large and expensive assets that are absolutely necessary for the proper functioning of the energy sector. Without Enterprise Products partners and his peers, energy will not reach where it is pierced to where it is used.
Image source: Getty Images.
However, the interesting thing about the middle stream industry is that most of the enterprises here included Enterprise simply charge fees for using their assets. The price of goods passing through their system is less important than demand. While the volume is strong, Enterprise will have solid indicators. But growth is modest because there are only two real ways to expand revenue.
The main method of increasing revenue is to increase prices. But an increase in inflation levels, or perhaps a little more, are the best that investors can expect on this front.
The construction and/or purchase of additional assets is the second major growth path. The problem is that capital investment opportunities are not as healthy as it was before, so the construction and purchase of energy infrastructure can only do so much.
This said that Enterprise is a very big business in the middle stream, so there are many assets in which he can invest, even if any of the investment is modest. Currently, MLP has about $ 7.6 billion in capital investment projects in the work. These projects are expected to be completed at different points by the end of 2026. There are another $ 700 million projects on the drawing board behind the projects that are being worked on now, which will expand even more the investment track.
All this is very good news for income investors. Although none of these projects will lead to a step change in the distribution of Products Products partners, they will all help maintain regular, modest annual increases. So if the latest trends are retained, the distribution can increase about 5% annually over the next three years. This is almost twice as large as the growth of historical inflation and means that the purchasing power of MLP distribution is likely to continue to grow over time.
The cherry on the cake with Enterprise Products Partners is its size. It has a scale to act as an industry consolidator, buying attractive assets for sale or simply buying whole competitors. This, in turn, can lead to faster distribution growth. Although you cannot rely on an acquisition -led growth, 5% or more distribution growth floor with the possibility of more attractive history over the next few years, given the elevated profitability offered today.
Enterprise Products Partners will not interest all investors. It is probably most attractive to investors of dividends trying to maximize current income.
However, the nice piece is that you do not need to give up dividend growth to get a yield of 6.8%. Of course, the growth of the distribution will be slow and stable over the next three years, but this slow and stable growth means that you will not lose the basis for inflation. That way, the yield here will probably be as attractive in three years as it is now.
Before you buy shares in Enterprise Products partners, consider this:
Thehe Motley Fool stock adviser Analyst team has just identified what they think is 10 best shares For investors to buy now … and Enterprise Products partners were not one of them. The 10 shares that made the abbreviation could lead to the return on monsters in the coming years.
Consider whenNetflixMake this list on December 17, 2004 … If you have invested $ 1,000 at the time of our recommendation,You will have $ 598,818! ** Or when NvidiaMake this list on April 15, 2005 … If you have invested $ 1,000 at the time of our recommendation,You will have $ 666,416! **
It is now worth notingStock adviserThe total average return is872%-market overdue compared to160%for S&P 500. Don’t miss the top 10 list available when you joinStock adviserS
See the 10 shares »
*Stock Advisor since April 28, 2025
Reuben Greg Brewer has no position in any of the said shares. Motley Fool recommends partners of Enterprise Products. Motley Fool has a policy of disclosure.
Where will the Enterprise Products partners be in 3 years? Originally published by Motley Fool
