Enterprise Products Partners: Moving American-Made Power to Help Make the World a Better Place

The thing that most investors will find most attractive about Enterprise Products Partners (NYSE: EPD) is likely to be its lofty 6.6% distribution yield. There's a lot to discuss on that front. But there's another notable feature of this master limited partnership's (MLP's) business, because it is helping America make the world a better place with American-made energy.

More about Enterprise Products Partners' big yield

The average energy stock has a dividend yield of around 3.6%. Clearly, Enterprise's distribution yield is far more attractive. From this perspective alone, the MLP's yield is attractive. But that yield is backed by a distribution that has been increased annually for 26 consecutive years. That's an impressive streak, given the inherent volatility of the energy sector.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

The good news doesn't stop there because the distribution is built on a rock-solid financial foundation. For starters, Enterprise's balance sheet is investment grade-rated. And the MLP's distributable cash flow in 2024 covered its distribution by a lofty 1.7x. There is a lot of room for adversity before a distribution cut would be in order here.

Given the high yield, distribution growth tends to be modest. Investors should expect low-to-mid single digits over time. However, if you are looking to maximize current income, that probably won't be a big bother to you. But what about the operating business behind the distribution?

Enterprise Products Partners: Spreading American power the world over

For investors looking to buy American, Enterprise Products Partners is an interesting story. For starters, it is one of the largest midstream companies in the United States. That means that it owns the energy infrastructure, like pipelines, that help to move oil and natural gas from where they are produced to where they are used. This is an inherently local business.

The United States, meanwhile, is one of the largest producers of oil and, increasingly, natural gas in the world. While companies that drill for these fuels tend to be volatile because they are reliant on commodity prices, Enterprise collects fees for the use of its vital energy assets. So long as demand remains strong, the MLP's cash flow should remain fairly consistent through the energy cycle. Given the importance of energy to the global economy, demand is normally pretty solid through the cycle.

The biggest change in recent years has been on the natural gas side, where the fuel has increasingly displaced dirtier-burning coal for power generation. That's been a global trend, and the United States has become a key source of natural gas for the world. That seems like a trend that will continue, noting that the U.S. is generally considered a more politically and economically stable source for the fuel.

Natural gas happens to be the core focus of Enterprise Products Partners' business. Roughly 55% of its gross operating margin comes from its natural gas liquids pipelines and 13% from natural gas pipelines and services. This means that more than two-thirds of the MLP's business is natural gas. It is clearly positioned well to keep helping U.S. energy help the world -- while paying large and reliable dividends all along the way.

If you believe in American power, believe in Enterprise

Although there is a long-term shift taking place toward cleaner alternatives in the energy sector, natural gas is likely to play a very important part in the process. And U.S.-made natural gas is an increasingly large player in the space. Enterprise Products Partners is helping to support the trend, collecting reliable fees with its toll-taker business model. And that allows you to sit back and collect a lofty American-made income stream.

Should you invest $1,000 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 $640,662!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $814,127!*

Now, it’s worth noting Stock Advisor’s total average return is 963% — a market-crushing outperformance compared to 168% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 19, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.