Enterprise Products Partners' stock offers a 6% forward yield.
The company operates a robust portfolio of midstream assets.
Enterprise Products Partners stock is trading at a slight premium to its historical valuation, but it remains an attractive option for investors seeking passive income.
Extending its impressive 16.4% rise in 2025, the S&P 500 (SNPINDEX: ^GSPC) has soared more than 11.3% since the start of the year. While this is a cause for glee among investors who have seen many of their stocks flourish, those in the know recognize that the market can't rise forever. To prepare for the inevitable market downturn, therefore, many are turning to reliable dividend stocks to shore up their streams of passive income.
Enterprise Products Partners (NYSE: EPD) is a common consideration. The midstream specialist is structured as a master limited partnership, so it doesn't pay a corporate dividend. Instead, it returns capital to investors through quarterly partnership cash distributions, which currently offer an attractive 6% forward yield, meaning a $5,000 investment today would yield about $302 over the next year. Though investors need to know that with MLPs, K-1s can be complicated and may require filing additional state tax returns, and can delay an investor's taxes as MLPs typically send K-1s in mid-March.
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Operating more than 50,000 miles of pipeline, Enterprise Products Partners is a midstream stalwart that transports crude oil, natural gas, and other products throughout the United States. In addition, the company's portfolio includes 19 gas processing plants, 21 deepwater docks, and a variety of other energy assets.
And it's poised to keep growing. The company currently has about $6.5 billion in major projects in development. To reassure investors that these reinvestments in the company won't be fruitless, it's worth noting that over the past 10 years, Enterprise Products Partners has averaged a 12% return on invested capital -- a figure that certainly supports the company's commitment to rewarding shareholders.
The stock's 6% yield may initially seize investors' attention, but it's the company's steadfast commitment to increasing its distribution -- 28 consecutive years so far -- that provides another indication that Enterprise Products Partners is a powerful way to power a strong passive income stream.
While Enterprise Products Partners' stock is trading at 8.7 times operating cash flow, a slight premium to its five-year average multiple of 7.8, it's worth digging a little deeper into your pockets for a solid passive income opportunity like this one.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.