This "Boring" Pipeline Stock Has Never Cut Its Dividend. Here's the 1 Number I'd Watch.
Key Points
Enterprise Products Partners has raised its payout continuously for 29 years in a row.
A big reason for this is its conservative approach to distributing cash flow.
That said, investors should also keep an eye on Enterprise's distribution coverage ratio.
- 10 stocks we like better than Enterprise Products Partners ›
Enterprise Products Partners (NYSE: EPD) has raised its quarterly distributions for 29 consecutive years, never once reducing its payout. Despite midstream energy's steadiness relative to other segments of the energy sector, a track record of zero dividend cuts or suspensions is quite rare among pipeline stocks. Other large pipeline master limited partnerships (MLPs), including Plains All American Pipeline and Energy Transfer, have had to cut their distributions in the past.
A key reason for Enterprise's strong record is its approach to cash flow distribution. By taking a more cautious approach, this MLP's unitholders could continue to benefit from its payout consistency.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
Enterprise Products Partners and its well-covered dividend
In its quarterly earnings releases, Enterprise Products provides numerous financial metrics. One to pay particular attention to is the coverage of distributions ratio, which is distributable cash flow divided by distributions. Last quarter, this figure came in at 1.9x.
In other words, the MLP generated distributable cash flow nearly twice the size of distributions. With this high coverage, Enterprise is able to, on one hand, maintain and grow its nearly 5.75% dividend. At the same time, there's plenty of cash flow on hand to fund growth and expansion, reducing Enterprise Products Partners' need to borrow or issue additional MLP units.
Keeping an eye on this metric
Enterprise Products Partners is not for all investors. For those seeking stable gains, largely in the form of cash distributions, it's a solid opportunity. Keep in mind, however, that distribution growth has slowed down in recent years.
Moreover, if you do choose to buy Enterprise Product Partners, be sure to keep an eye on the coverage ratio. Each quarter, management presents this figure. If it starts to materially drop, it could be a sign that Enterprise is deviating from its historical approach, calling into question the sustainability of its future dividend growth.
Should you buy stock in Enterprise Products Partners right now?
Before you buy stock in Enterprise Products Partners, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Enterprise Products Partners wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $440,710!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of August 30, 2026.
Thomas Niel has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.
Recommended Articles
