This High-Yield Dividend Stock's 28-Year Dividend Growth Track Record Proves It Can Deliver a Lifetime of Passive Income

Enterprise Products Partners (NYSE:EPD) has delivered 28 years of distribution growth. The master limited partnership (MLP) has returned $65 billion in cash to its investors during that period through its growing distribution and unit repurchases. The MLP currently yields 5.9%, putting it well above the S&P 500's 1% yield.

The pipeline company is in a strong position to continue increasing its high-yielding distribution. That makes it an ideal option for investors seeking a lifetime source of passive income.

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Built on a fortified foundation

Enterprise Products Partners owns and operates an integrated energy midstream platform with diversification across products and markets. Its assets are highly resilient as fee-based contracts underpin about 80% of its earnings, muting much of the impact of commodity price volatility. It has historically delivered income stability during major market downturns and growth in normal operating conditions.

The MLP generated $2.3 billion of operational distributable cash flow during the second quarter, a robust 21% increase, driven by expansion projects and strong market conditions. That was enough to cover its high-yield payout by a comfy 1.9x, enabling it to retain $1.1 billion in cash to reinvest in the partnership. The pipeline company's growing cash flow and strong coverage level have allowed it to increase its distribution by 2.8% over the past year.

Enterprise Products Partners further fortifies its high-yielding distribution with a balance sheet that sets the standard for financial strength in the energy midstream sector. It has a leading A-/A3 credit rating, supported by a low leverage ratio of 3.0x (comfortably within its conservative 2.75x-3.25x target range).

The company's stable cash flows, robust post-distribution free cash flow, and balance sheet strength give it the flexibility to weather market downturns and continue investing to grow the partnership. It also allows the company to return additional cash to investors via unit repurchases ($405 million over the last year as part of its $5 billion unit repurchase program).

Several years of growth visibility

Enterprise Products Partners ended the second quarter with $6.5 billion of major capital projects under construction. They included several new natural gas processing plants across the Permian Basin, the expansion and extension of a natural gas liquids pipeline, a new NGL fractionator, and expanded LPG export capacity. The company expects these projects to enter commercial service through the first quarter of 2029. That provides it with lots of visibility into its growth over the next few years.

Meanwhile, there's more growth likely ahead. The company forecasts that U.S. natural gas demand will grow by 11 Bcf/d to 26 Bcf/d by 2030, driven by AI data centers and liquefied natural gas (LNG) exports. Additionally, the company sees strong supply growth ahead for crude oil, ethane, and LPG. Enterprise Products Partners' extensive, strategically located infrastructure puts it in a strong position to capitalize on the expected growth in supply and demand. It should continue to approve new pipeline expansions, natural gas processing plants, NGL fractionators, and export capacity expansion projects.

Enterprise Products Partners also has the financial flexibility to make acquisitions as opportunities arise, enhancing its growth. Last year, it bought Occidental Petroleum's natural gas gathering affiliate in the Permian Basin for $580 million. The MLP is now building new natural gas processing plants to support Occidental's growth in the region. Meanwhile, it bought Pinon Midstream for $950 million in 2024 to expand its sour gas treating and acid gas injection well capacity in the Permian, which it's currently expanding.

A durable passive income investment

Enterprise Products Partners has delivered 28 consecutive years of distribution increases, which is impressive considering the volatility in the energy sector. That track record is a testament to its resilient business model, fortress financial foundation, and steady growth. While there's no guarantee the MLP (which sends investors a Schedule K-1 Federal tax form each year) will continue increasing its high-yielding distribution for years to come, the company is currently in a strong position to do so. That makes it an ideal high-yield dividend stock to buy and hold for a potential lifetime of passive income.

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.