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Enterprise Products Partners L.P. (EPD - Analyst Report) announced an increase in the quarterly cash distribution to 67 cents per common unit, or $2.68 per unit on an annualized basis. The quarterly distribution will be paid on May 7, 2013, to unitholders of record as of the close of business on Apr 30, 2013.

This distribution, which represents a 6.8% increase over the $0.6275 per unit distribution declared for the first quarter of 2012, is the 44th hike since EPD’s initial public offering in 1998 and the 35th consecutive quarterly increase.

EPD is a leading master limited partnership (MLP) engaged in providing a wide range of midstream energy services to the producers and consumers of natural gas, natural gas liquids (NGL) and crude oil.

We believe EPD remains a core holding in the master limited partnership portfolio with a focus on projects that generate stable cash flow and contribute to its integrated value chain. While EPD increased its cash flow distribution by 6.5% in the fourth quarter, it also deployed cash in various fee-based development projects that will likely generate operating cash flow to support its future distribution growth.

Over the last one year, the partnership has commissioned several projects worth around $3 billion. The projects completed during the fourth quarter include the sixth NGL fractionator at Mont Belvieu and the expansion of the natural gas and NGL pipeline systems serving the Eagle Ford shale. The Eagle Ford natural gas, NGL and crude oil pipelines are expected to increase volumes over the coming years. Recently, the partnership commissioned the third processing train at its Yoakum natural gas plant. These projects are likely to boost cash flow in the coming years.

Seaway Crude Oil Pipeline Company LLC – a 50/50 joint venture between the affiliates of EPD and Enbridge Inc. (ENB - Snapshot Report) – manages the Seaway crude oil pipeline.

However, EPD remains vulnerable to macro conditions and unstable oil and gas prices, which in turn could hurt margins in NGL, natural gas and other businesses. Hence, the partnership, which recently entered into a 50/50 joint venture with Plains All American Pipeline, L.P. (PAA - Analyst Report) for a crude oil pipeline in South Texas, carries a Zacks Rank #3 (Hold). NuStar Energy L.P. (NS - Analyst Report) is another MLP in the oil and gas production pipeline sector, which holds a Zacks Rank #2 (Buy) and is expected to perform better.
 

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