Enterprise Products Partners (EPD) – A High Yield Stock

There are many overvalued stocks in today’s market that I do not find myself excited about. However, we can still find some high-quality, undervalued dividend growth stocks in this overvalued market. For example, we covered Merck (MRK) and Bristol-Myers Squibb (BMY) in earlier articles. Both of these companies are in the pharmaceutical industrial which has lagged the overall market. That’s ok because it allows long-term investors to load up on shares. I have another undervalued dividend growth stock in a different industry that’s on sale at a reasonable price in today’s post. That company is Enterprise Products Partners, which is a high yield dividend growth stock.

Enterprise Products Stock

Overview of Enterprise Products Partners

Enterprise Products Partners L.P. (EPD) is an American pipeline company that was founded in 1968. The Company is an American midstream natural gas and crude oil pipeline company with headquarters in Houston, Texas. The pipeline giant owns about 50,000 miles of pipelines for natural gas, oil, refined products, and petrochemicals. The company has storage capacity of about 260 million barrels of oil and refined products and 14 billion cubic feet of natural gas. The company operates through four segments: NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services. Today, the Company has a market capitalization of approximately $52.2 billion and currently trades hands for a little under $24 per share.

Enterprise Products Stock Overview

Source: Enterprise Products Investor Presentation

Enterprise Products Partners Dividend History, Growth, and Yield

EPD was hit hard during the COVID-19 beginnings. In January 2020, EPD was going for $28 per share. In the lows of March 2020, the Company was trading hands for $12.27. This represents a decline of 56% in less than two months. I love to take advantage of high-quality companies that have this kind of decline. I loaded up on shares of EPD with a cost basis of $13.84. I now have a dividend yield on cost of 13%. These are the many reasons why I love being a dividend growth investor. We will now look at Enterprise Products stock dividend history, its growth, and yield. We will then determine if it’s still a good buy at current prices.

Enterprise Products Partners Dividend Growth

Asa dividend growth stock, Enterprise Products has been raising its dividend for 22 years making the company a Dividend Contender. In those 22 years, EPD had an average dividend growth rate of ~6.1%. This is outstanding considering that midstream companies tend to have a high starting yield, which we will discuss later. EPD’s past 5-year dividend growth average is about 2.9%, and the previous 10-year average is approximately 4.5%. So, the dividend growth rate has slowed down compared to its trailing 22-year average. Also, note that the most recent dividend increase was only 1.1%. This is concerning as a dividend growth investor. As a dividend growth investor, we would like to see companies continue to grow its dividend faster than inflation.

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Disclosure: The author is long EPD.

Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. We are not providing you with individual ...

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