Enterprise Products Partners currently has a 6.1% forward dividend yield and 28 consecutive years of dividend growth.
Over the past 20 years, this master limited partnership (MLP) has quadrupled its distributable cash flow, paving the way for steady, consistent payout growth.
With this combination of high yield and payout consistency, consider it a standout among pipeline stocks.
Enterprise Products Partners (NYSE: EPD) is a master limited partnership (MLP) specializing in the ownership of oil and gas pipelines. Along with sporting a high forward dividend yield of 6.1%, Enterprise Products Partners has a long track record of dividend growth. The MLP has raised its dividend, technically known as a distribution, for 28 consecutive years.
This combination of high yield and a history of dividend growth makes it a strong choice for investors seeking steady, growing portfolio income. Better yet, based on its payout ratio and growth history, this high-yielder has a strong history of dependable, consistent payout increases.
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Currently, Enterprise Products Partners pays unitholders $0.56 per unit quarterly, or around $2.24 per unit annually. Hence, to generate $2,000 per year in dividend income, investors need around 893 shares. With shares priced at $36.69, this position is worth $32,764.
Enterprise Products Partners has raised its payout by around 4% annually over the past five years, 3.6% over the past 10 years, and 4.8% over the past 20 years. While past performance does not guarantee future results, this consistency of 3.5%-5% annual dividend growth over decades strongly signals similar growth in the years ahead.
In terms of dividend sustainability, Enterprise Products Partners takes a slightly more conservative approach to paying out distributable cash flow (DCF) to unitholders. While competing pipeline stocks and master limited partnerships pay out 65% and sometimes more than 70% of DCF, based on its 1.7x coverage ratio, this MLP distributes less than 60% of its DCF in the form of cash payouts.
That's not all. Enterprise Products Partners has steadily grown its operational DCF over the last 20 years, even amid macro challenges such as the late 2000s financial crisis, the mid-2010s oil price collapse, and the COVID-19 pandemic of 2020. During this time, DCF has nearly quadrupled. All of these factors make this pipeline stock a standout.
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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.