Daily Stock Pick: Enterprise Products

This week, I'm looking for the fourth consumer energy representative of four for my Ivy portfolio.

That energy sector includes six industries all related to bringing oil and gas to market. They are: drilling, exploration and production (E&P), equipment and services, integrated, midstream, refining & marketing. (Those six oily and gassy enterprises.)

Today I'm reviewing a large-cap oil and gas midstream firm, named Enterprise Products Partners LP ticker symbol is EPD.

Enterprise Products Partners is a master limited partnership that transports and processes natural gas, natural gas liquids, crude oil, refined products, and petrochemicals.

It is one of the largest midstream companies, with operations servicing most producing regions in the Lower 48 states.

Enterprise is particularly dominant in the NGL market and is one of the few MLPs that provide midstream services across the full hydrocarbon value chain.

The company was founded in 1968 and is headquartered in Houston, Texas.

I use three key data points to gauge the value of any dividend equity-like Enterprise Products Partners LP:

(1) Price

(2) Dividends

(3) Returns

Besides those three, several other keys will finally unlock an equity or fund in which to invest.

Those first three primary keys, however, best tell whether a company has made, is making, and will make money.

EPD Price

Enterprise's price per share closed at $29.35 yesterday. A year ago its price was $24.57. Price rose $4.78 or nearly 19.5% in the past year.

Assuming Enterprise's stock trades in the range of 20 to $35 this year, Enterprise's recent $29.35 price could rise by $2.65 and go to $32.00 by early-April, 2020.

EPD Dividends

Enterprise's most recent Quarterly dividend was $0.435 declared January 15th and paid, February 8th.

That $0.435 Q dividend equates to an annual payout of $1.74 for a yield of 5.93% at yesterday's $29.35 closing price.

Gains For EPD?

Adding the $1.74 annual estimated dividend to my $2.65 estimate of Enterprise's price upside shows a $4.39 potential gross annual gain, per share, which will be reduced by costs to trade those shares.

Say we put a little under $1,000.00 today at the $29.35 recent stock price would buy us 34 Enterprise Products Partners LP shares.

A $10 broker fee paid half at purchase and half at sale costs $0.29 per share.

Subtract that $0.29 brokerage cost from the estimated $4.39 gross annual gain leaves a net gain of $4.10 X 34 shares

= $139.40 or a 14% net gain on a $997.90 investment.

Therefore, Enterprise Products Partners LP whose trading ticker symbol is EPD, now shows a possible net gain of about 14% including a 5.93% dividend yield.

Twenty-three brokers cover this stock:

Seventeen say "buy" EPD shares.

Five say EPD will "outperform" peers.

One says "hold" EPD.

Therefore, you can look at  Enterprise Products Partners LP and see it has made money, is making money, and could throw a net gain of 14% including a 5.93% dividend yield. It could be more, it could be less.

The above speculation is based on past year performance. The actual results remain to be seen to determine if Enterprise Products Partners LP is worth your time and money.