This 6.7% Dividend Stock Looks Absurdly Good Today

When considering dividend stocks that stand out in today’s market, Enterprise Products Partners (EPD) shines brightly with a compelling 6.7% dividend yield. This midstream energy company has become a staple for income investors, providing not only steady distributions but also a remarkable historical performance amidst market fluctuations.

In the past two years, my investment in Enterprise Products Partners has yielded a total return of approximately 45%. Although this growth has lagged behind the 56% total return seen in the S&P 500, the consistent distribution was a reassuring element I could rely on through times of market uncertainty.

Why EPD is an Income Investor’s Dream

The appeal of Enterprise Products Partners is multifaceted. At its heart, the company provides an attractive forward distribution yield of 6.7%. As a master limited partnership (MLP), EPD doesn’t rely heavily on unit price appreciation to deliver substantial returns for its investors. Instead, it focuses on providing a predictable income stream, making it a wise choice for those who prioritize yield.

Another factor that sets Enterprise apart is its impressive track record of distribution increases. The company has raised its distributions for an astounding 26 consecutive years. Additionally, since its inception in 1998, it has returned $1.2 billion through “invisible” distributions via unit buybacks.

However, achieving this level of consistency wasn’t without its challenges. Throughout its history, Enterprise Products Partners has navigated significant obstacles, including the 2007-2009 financial crisis, the oil price collapse between 2015 and 2017, and the global disruptions caused by the COVID-19 pandemic. Yet, through these turbulent times, EPD has consistently generated strong cash flow per unit to support its distributions, unlike some rivals that resorted to asset sales to maintain payouts.

With more than 50,000 miles of pipeline and extensive facilities, including 43 natural gas processing trains and 26 fractionators, EPD is well-equipped to meet the growing energy demands. Furthermore, the MLP boasts storage capacity for over 300 million barrels of liquids and has 20 deepwater docks.

Long-Term Growth Prospects

While Enterprise Products Partners has lagged the S&P 500 recently in total returns, the long-term perspective offers a different narrative. Over five years, the MLP has shown strong performance, and early predictions indicate it slightly outperformed the S&P 500 for 2025 thus far.

A key driver behind this growth is the rising demand for U.S. hydrocarbons, particularly natural gas liquids (NGLs). This trend looks set to continue, spurred by the needs of data centers that drive artificial intelligence (AI) technologies. These centers require substantial electricity, making natural gas an appealing fuel choice for powering the plants that serve them. Meanwhile, Liquefied Natural Gas (LNG) demand in Asia and Europe is expected to rise approximately 30% by 2030.

Enterprise Products Partners is strategically positioned to capitalize on these trends with $7.6 billion in major capital projects currently underway. Notably, $6 billion of these projects are set to come online this year, enabling further growth. The company is also proactive in seeking international opportunities, with its staff visiting over 20 cities globally to enhance export growth.

Valuation and Investment Appeal

In addition to its robust distribution and growth potential, Enterprise Products Partners presents an attractive valuation. The MLP’s units currently trade at 11.2 times forward earnings, positioning it as the lowest in its peer group. This valuation is also significantly below the energy sector’s forward price-to-earnings ratio of 15.9, further establishing EPD as an appealing investment opportunity.

In conclusion, Enterprise Products Partners emerges as an exceptional choice for income-focused investors looking for both a solid distribution yield and significant growth opportunities. With its history of consistent payouts, a well-established infrastructure, and strategic positioning in the energy sector, EPD stands as a testament to resilience and potential in fluctuating markets.

In today’s climate of economic uncertainty, investing in well-performing dividend stocks is essential for building sustainable wealth. If you’re searching for a stock that embodies stability, growth potential, and an attractive valuation, look no further than Enterprise Products Partners. For those seeking a solid investment in the energy sector, EPD indeed looks absurdly good today.

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