3/8/25
Enterprise Products Partners (EPD) has long been a favorite among income-focused investors. As a leading midstream energy company, EPD plays a crucial role in transporting and processing natural gas, crude oil, and other refined products across the U.S. Its vast pipeline network and storage facilities provide steady cash flow, making it a dependable option for those seeking passive income.
One of the biggest draws for investors is EPD’s ability to deliver consistent and growing distributions. Unlike many energy companies that experience wild revenue swings due to fluctuating oil and gas prices, EPD operates on a fee-based model. This means it makes money on the transportation and storage of energy products rather than their prices. That stability has allowed the company to reward shareholders with steady payouts for decades.
But is EPD still a strong dividend investment today? Let’s take a closer look.
📌 Key Dividend Metrics
💰 Dividend Yield: 6.53%
📈 5-Year Average Yield: 7.88%
💵 Annual Dividend: $2.14 per unit
🔄 Dividend Growth Streak: Over 25 years
📊 Payout Ratio: 77.32%
📆 Last Dividend Paid: February 14, 2025
⚠️ Ex-Dividend Date: January 31, 2025
Dividend Overview
EPD is known for its strong, steady dividend payments, and it’s easy to see why investors love it. With a current yield of 6.53%, it provides far better income than most traditional dividend stocks. The company has also been raising its distribution for over 25 years, making it one of the more reliable income investments in the energy space.
Since EPD is structured as a Master Limited Partnership (MLP), it distributes most of its earnings directly to investors. That allows for higher payouts than typical corporate dividends, but it also means shareholders receive a K-1 tax form rather than a 1099. This can be a bit of a headache at tax time, but for many long-term investors, the generous payouts make it well worth it.
Another key advantage is that EPD’s dividend is backed by stable cash flows rather than volatile commodity prices. Its fee-based model ensures that cash keeps rolling in even when oil and gas prices dip. That’s a major plus for investors looking for consistency over speculation.
Dividend Growth and Safety
EPD isn’t just about a high yield—it also boasts a history of steady growth. The latest quarterly payout of $0.50 per unit marks another small but meaningful increase. While the growth rate isn’t explosive, it’s consistent, and that’s exactly what income investors should look for.
One of the most important factors in dividend safety is the payout ratio. At 77.32%, EPD is distributing a significant portion of its cash flow, but it’s not overextending itself. Midstream companies like EPD typically have higher payout ratios, so this isn’t a red flag. What’s more important is the distribution coverage ratio, which measures how well cash flows cover dividend payments.
EPD’s coverage ratio consistently stays above 1.5x, meaning the company generates at least 50% more cash than needed to cover distributions. That’s a strong indicator that payouts are safe, even if the energy sector hits a rough patch.
Another factor to consider is the company’s debt. EPD carries a debt-to-equity ratio of 109.21%, which is on the higher side, but not unusual for a capital-intensive business like this. The company’s strong credit rating and predictable cash flow help mitigate concerns about leverage.
Bottom line: EPD’s dividend is secure and likely to continue growing at a modest pace.
Chart Analysis
Price Action
The stock has been in a clear uptrend over the past several months, making higher highs and higher lows. There was a strong rally towards the end of last year, followed by a period of consolidation. The price is currently trading around $33.46, near the higher end of its recent range.
The 50-day moving average is sloping upward and has remained above the 200-day moving average, which confirms the bullish trend. The recent price action suggests the stock is holding up well, even after its strong run-up.
Moving Averages
The 50-day moving average is currently acting as a dynamic support level, as the stock has bounced off it multiple times. The 200-day moving average continues to trend upward, showing long-term strength. The fact that the stock is trading well above both moving averages signals that buyers are still in control.
If the price were to dip, the 50-day moving average could serve as the first level of support, with the 200-day moving average as a deeper cushion.
Volume and Momentum
Volume has remained steady, with occasional spikes during major price moves. The largest volume bars are seen during price surges, which indicates strong accumulation rather than distribution. However, there hasn’t been a major breakout volume surge recently, meaning the stock could be in a cooling-off phase.
The Relative Strength Index (RSI) is hovering in the mid-to-high range but hasn’t reached extreme overbought territory. This suggests that while the stock has seen strong momentum, it isn’t at an unsustainable level. A drop below the 50 level on the RSI could indicate waning momentum, while a push above 70 would suggest a new breakout attempt.
Recent Candle Patterns
The last five candlesticks show a mix of small-bodied candles, suggesting some indecision. There are wicks on both ends, which indicates a balance of buying and selling pressure. The price tested lower levels but found support, closing near the high.
One notable observation is that there hasn’t been a strong rejection from resistance, meaning sellers are not aggressively stepping in at current levels. If a breakout occurs above $34, it could lead to another leg higher. If the stock starts closing below $32.50, a pullback could be on the horizon.
Analyst Ratings
📈 Recent Upgrades
On March 6, 2025, Scotiabank raised its price target for EPD from $33.00 to $35.00, maintaining a sector perform rating. This adjustment suggests a modestly positive outlook, with analysts confident that EPD can sustain its steady growth within the midstream energy sector. The upgrade was driven by strong distributable cash flow growth, a stable balance sheet, and an attractive yield, which continues to appeal to income-focused investors.
📉 Recent Downgrades
On January 10, 2025, Wolfe Research took a more cautious stance, downgrading EPD from outperform to peer perform. This shift indicates that while EPD remains a solid stock, analysts believe it will perform more in line with industry peers rather than significantly outperform them. The downgrade was attributed to concerns over rising interest rates impacting debt costs, a slower-than-expected expansion pipeline, and potential regulatory hurdles affecting midstream operations.
🎯 Consensus Price Target
Right now, 20 analysts collectively rate EPD as a buy, with an average price target of $36.44, suggesting a potential upside of about 10.14% from the current share price. Individual price targets range from $32.00 on the low end to $40.00 on the high end, reflecting a mix of conservative and optimistic views on future performance.
🔍 Key Takeaway
These differing perspectives highlight the balance of optimism and caution among analysts. While some see continued dividend growth and financial stability as reasons for an upgrade, others point to macroeconomic factors and regulatory risks as reasons for a more neutral stance. Investors should weigh these insights carefully when evaluating EPD as a long-term dividend investment.
Earnings Report Summary
Enterprise Products Partners L.P. (EPD) recently released its fourth-quarter and full-year 2024 financial results, showcasing a robust performance across various operational segments.
Financial Performance
For the fourth quarter of 2024, EPD reported a net income attributable to common unitholders of $1.6 billion, translating to $0.74 per unit. This marks a 3% increase compared to the same period in the previous year. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) reached $2.6 billion for the quarter, reflecting a 4% year-over-year growth. Distributable cash flow (DCF) for the quarter was $2.0 billion, up 6% from the prior year, providing a distribution coverage ratio of 1.7 times.
For the full year 2024, EPD achieved an EBITDA of $9.9 billion and a DCF of $7.8 billion, with a coverage ratio of 1.7 times and $3.2 billion of retained DCF. These figures highlight the company’s strong financial health and its ability to generate substantial cash flows.
Operational Highlights
EPD set several operational records during 2024, moving 12.9 million barrels of oil equivalent per day, with the fourth quarter averaging 13.6 million barrels per day. The company reported 12 financial records and 16 operational records for the year, underscoring its efficiency and capacity in the midstream energy sector.
Segment Performance
- NGL Pipelines & Services: This segment reported a gross operating margin of $1.1 billion for the fourth quarter, driven by higher transportation volumes and increased processing margins.
- Crude Oil Pipelines & Services: The segment achieved a gross operating margin of $500 million, benefiting from increased pipeline volumes and higher demand for storage services.
- Natural Gas Pipelines & Services: This segment reported a gross operating margin of $300 million, with growth attributed to higher transportation volumes and new projects coming online.
- Petrochemical & Refined Products Services: The segment posted a gross operating margin of $400 million, supported by improved propylene production and increased marine terminal volumes.
Capital Investments and Outlook
EPD invested approximately $3.5 billion in growth capital projects during 2024, including the completion of several pipelines and processing facilities. The company anticipates investing an additional $2.5 to $3.0 billion in 2025 for ongoing expansion projects, reflecting its commitment to enhancing infrastructure and meeting market demand.
Enterprise Products Partners L.P. demonstrated strong financial and operational performance in 2024, reinforcing its position as a leading player in the midstream energy sector.
Financial Health and Stability
A strong balance sheet is key for a company like EPD, given the large-scale infrastructure projects it operates.
- Revenue (TTM): $56.22 billion
- Net Income: $5.84 billion
- Operating Cash Flow (TTM): $8.11 billion
- Total Debt: $32.37 billion
The numbers show that EPD is in solid financial shape. Operating cash flow comfortably covers capital expenditures and dividends, which reduces the need for additional debt. That’s an important sign of strength, especially in a rising interest rate environment.
EPD also benefits from having assets that are extremely difficult to replicate. The company’s pipelines and storage facilities create a wide competitive moat, ensuring steady demand for its services. This gives it an edge over competitors and allows for more predictable earnings.
Valuation and Stock Performance
EPD trades at a fair valuation relative to its earnings and cash flow.
- Price-to-Earnings (P/E): 12.17 (trailing), 11.06 (forward)
- Enterprise Value-to-EBITDA: 10.70
- Price-to-Book Ratio: 2.47
A forward P/E of 11.06 suggests EPD is attractively priced compared to the broader market. It’s not a deep value play, but it offers a reasonable entry point for investors seeking stable, high-yield income.
In terms of stock performance:
- 52-Week Range: $27.37 – $34.63
- Current Price: $33.46
- 50-Day Moving Average: $32.88
- 200-Day Moving Average: $30.43
EPD is currently near its 52-week high, showing strong investor confidence. While it’s not a high-growth stock, it has outpaced the S&P 500 over the past year, adding to its appeal as a steady performer.
Risks and Considerations
While EPD is a strong dividend stock, there are a few risks to keep in mind.
Regulatory uncertainty is always a factor for MLPs. Changes in tax laws or government regulations could impact how these companies operate. While there haven’t been any immediate threats, it’s something to watch.
Another potential issue is interest rate risk. With a significant amount of debt, EPD could see rising borrowing costs if interest rates stay high. However, its strong cash flows help offset this risk.
Energy market volatility is another consideration. While EPD is less exposed to oil and gas price swings than producers, a prolonged downturn in demand could still affect its earnings. Fortunately, its diversified asset base helps cushion against major industry shocks.
Finally, there’s the tax complexity of owning an MLP. Investors need to be aware that owning EPD means dealing with K-1 tax forms rather than simple 1099s. Those investing in retirement accounts should also be mindful of UBTI (Unrelated Business Taxable Income), which could lead to unexpected tax liabilities.
Final Thoughts
Enterprise Products Partners is a standout choice for dividend investors who prioritize income stability and steady growth. With its 6.53% yield, strong cash flow, and 25+ year track record of dividend increases, it remains a reliable option for long-term investors.
This isn’t a stock that will deliver massive capital gains, but that’s not why most investors own it. Instead, it offers a high-yield, low-volatility income stream backed by durable assets. For those comfortable with MLP tax structures, EPD is one of the most dependable dividend plays in the market today.
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