1 Top High-Yield Dividend Stock I'd Buy Without Hesitation In December

Enterprise Products Partners (NYSE: EPD) has been an elite income investment over the years. The master limited partnership (MLP) has raised its distribution payment for 27 years in a row. It currently offers a monster 6.7% yield, several times higher than the S&P 500 (1.2% yield).

The midstream giant is on the cusp of a major inflection point. That upcoming catalyst is why I'd buy the MLP without hesitation this December.

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The end of an era

Enterprise Products Partners launched a multi-year capital project investment cycle in 2022. The midstream giant has built several large-scale pipeline and marine terminal facilities over the past few years. Additionally, it has made a couple of acquisitions to expand its midstream footprint into new areas. As a result, it has the infrastructure to support growing production volumes in the Permian and Haynesville basins for many years to come.

This year marked the peak in capital spending. Enterprise Products Partners is on track to invest $4.5 billion into growth capital projects this year, up from $3.9 billion last year and $2.9 billion in 2023. That spending enabled the company to complete several large-scale capital projects, including its new Neches River Terminal and the Bahia natural gas liquids pipeline. Overall, the company anticipates finishing $6 billion of growth capital projects during the second half of this year.

Enterprise Products Partners expects its growth capital spending to decline substantially next year. At the end of the third quarter, the MLP anticipated that its 2026 growth capital spending would be between $2.2 billion and $2.5 billion. This would enable the company to wrap up construction on phase two of its Neches River terminal, build two additional gas processing plants, and the expansion of the Enterprise Hydrocarbons Terminal. While the company has since approved an expansion of the Bahia pipeline as part of a joint venture with ExxonMobil, its new partner is contributing cash to the venture, helping offset the expansion cost.

The coming free cash flow surge

Enterprise Products Partners is about to start an exciting new chapter. The $6 billion of growth capital projects entering service in the second half of this year will contribute significant incremental cash flow over the coming quarters as they ramp up their volumes. Additionally, the company's capital spending will decrease substantially next year. With its cash flow rising and its capital spending falling, Enterprise Products Partners' free cash flow should surge in 2026.

The MLP will undoubtedly use a portion of its rising free cash flow to increase its distribution. Enterprise Products Partners currently produces enough cash flow to cover its payout by a comfortable 1.5 times. It also has the strongest balance sheet in the midstream sector, with a low 3.3 times leverage ratio. That gives it lots of flexibility to raise the payment, which it has increased by 3.8% over the past year. The MLP could provide investors with a sizable pay bump in 2026 or grow the distribution at a higher rate over the next few years.

Additionally, Enterprise Products Partners anticipates repurchasing more of its units. The MLP recently boosted its unit repurchase authorization from $2 billion to $5 billion. After repurchasing $80 million of its units in the third quarter, the company has about $3.6 billion remaining on the new authorization. It could ramp up its repurchase rate or opportunistically repurchase more units during a market slump.

The fuel to produce robust returns in 2026

Enterprise Products Partners has lots of momentum heading into 2026. Its free cash flow is on track to surge, which will give it more money to return to investors. That could give it the fuel to produce strong total returns in the coming year. This high-octane total return potential makes the MLP look like an attractive investment opportunity this December for those comfortable receiving the Schedule K-1 Federal Tax Form it sends each year.

Matt DiLallo has positions in Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.