This Dividend Stock Yielding Over 7% Has Plenty of Fuel to Grow Through at Least 2027

More often than not, a high dividend yield is a sign that a company's high-growth days are in the rearview mirror. Higher-yielding companies are often mature businesses that generate lots of cash, most of which they distribute to shareholders because the companies lack opportunities for reinvestment.

However, that's not the case with Enterprise Products Partners (NYSE: EPD). The master limited partnership (MLP) offers investors the best of both worlds with a yield of over 7% and plenty of growth coming down the pipeline through at least 2026. As a result, it could have the fuel to produce high-octane total returns over the next couple of years.

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A solid showing

Enterprise Products Partners is already growing at a solid rate for such a high-yielding company. The energy midstream giant grew its distributable cash flow by 7% in the second quarter to $1.8 billion. The company benefited from strong volume growth across its operations, which set several records due to robust oil and gas production growth and demand for those commodities.

The MLP produced enough cash in the period to cover its high-yielding distribution by a comfy 1.6 times, even after factoring in the 3.4% increase in the payout over the past year. That allowed Enterprise Products Partners to retain nearly $750 million in cash during the quarter.

The coming expansion wave

The midstream giant is currently plowing all its retained cash, and then some, into expanding its operations. The MLP invested $1.2 billion into growth capital projects during the second quarter, and expects to fund between $4 billion and $4.5 billion of expansion-related capital spending this year. It has been bridging the gap between its free cash flow and capital spending needs with its balance sheet. Despite that, Enterprise ended the quarter with a low 3.1 times leverage ratio, supporting one of the strongest balance sheets in the energy midstream sector.

The company's growth capital spending is about to pay off. Enterprise Products Partners expects to complete $6 billion of organic growth capital projects by the end of this year. These projects include two new gas processing plants, phase one of its new Neches River Terminal, another natural gas liquids (NGL) fractionator, and an NGL pipeline. These growth capital projects will provide the MLP with meaningful incremental cash flow over the coming quarters.

On top of that, Enterprise Products Partners recently acquired a natural gas gathering affiliate from Occidental Petroleum for $580 million. As part of the deal, the MLP agreed to build a new gas processing facility (Athena) to support Occidental's operations, which it expects to complete in the fourth quarter of next year. This acquisition will provide the MLP with incremental cash flow this year and more earnings growth once it completes Athena.

More growth ahead in 2026

Athena is one of several additional expansion projects Enterprise Products Partners expects to complete in 2026. The MLP currently plans to invest another $2.2 billion-$2.5 billion into growth capital projects next year. This will enable it to complete the construction of Athena, the Mentone West 2 gas processing plant (first half of 2026), phase two of the Neches River Terminal (first half of 2026), and an expansion of the Enterprise Hydrocarbons Terminal (end of 2026).

Given the timing of some of these projects, Enterprise Products Partners will have the fuel to grow its earnings and cash flow through 2027. That suggests the MLP should be able to continue growing its high-yielding payout over the next few years, which it has done for the past 27 consecutive years.

Meanwhile, the company has ample financial capacity to continue approving additional expansion projects and making accretive acquisitions as opportunities arise. It should have no shortage of opportunities. Demand for energy, particularly natural gas, is increasing due to drivers such as AI data centers, LNG, and the onshoring of manufacturing.

High-octane total-return potential

Enterprise Products Partners offers investors the best of both worlds. It pays a high-yielding distribution, providing investors with a nice base income return. On top of that, it's about to experience a major growth acceleration in 2026 as it completes multiple organic expansion projects. That growth will give it more fuel to increase its distribution and should boost its unit price. This combination of income and upside potential makes the MLP an attractive investment opportunity for those who are comfortable receiving the Schedule K-1 Federal Tax Form it sends investors each year.

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