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Enterprise Products' Distribution Yield Is More than 6%: Is it Lucrative?
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Key Takeaways
Enterprise Products posts steady fee-based earnings and a long record of distribution growth.
EPD's 6.79% yield sits below the industry today, but its three-year median outpaces peers.
EPD units gained 6.5% in a year and trade at a lower EV/EBITDA than the broader industry.
Enterprise Products Partners LP (EPD - Free Report) is a midstream energy giant. Notably, EPD’s midstream properties comprise pipeline assets spanning more than 50,000 miles, liquids storage properties with a capacity of more than 300 thousand barrels and other assets. These assets are backed by stable fee-based revenues since the pipeline and storage assets are booked by shippers for the long term.
Enterprise Products Partners noted that fee-based earnings have consistently been the largest contributor to its gross operating margin each year. Thus, the partnership’s business model is highly predictable and stable. Backed by this resilient business model, EPD has managed to increase its distribution for 27 consecutive years.
Currently, EPD’s distribution yield is 6.79%, but it is lower than the 6.9% yield of the composite stocks belonging to the industry. The three-year median distribution yield of EPD of 7.22% is higher than the industry’s 6.87% yield. It implies that EPD’s yield is temporarily lagging its peers right now, but historically, it has offered a stronger yield than the industry.
KMI & ENB Also Have Stable Business Models, But Lower Yields
Kinder Morgan Inc. (KMI - Free Report) and Enbridge Inc. (ENB - Free Report) are two other midstream energy majors. By the very nature of their businesses, both KMI and ENB also have predictable cash flows. This is because KMI and ENB also generate stable fee-based earnings from their respective midstream assets.
The current dividend yields of 4.2% for KMI and 5.6% for ENB, however, are lower than Enterprise Products’ yield.
EPD’s Price Performance, Valuation & Estimates
Units of EPD have gained 6.5% over the past year, against the 7.1% decline of the composite stocks belonging to the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, EPD trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.61X. This is in line with the broader industry average.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for EPD’s 2025 earnings has seen downward revisions over the past seven days.
Image: Bigstock
Enterprise Products' Distribution Yield Is More than 6%: Is it Lucrative?
Key Takeaways
Enterprise Products Partners LP (EPD - Free Report) is a midstream energy giant. Notably, EPD’s midstream properties comprise pipeline assets spanning more than 50,000 miles, liquids storage properties with a capacity of more than 300 thousand barrels and other assets. These assets are backed by stable fee-based revenues since the pipeline and storage assets are booked by shippers for the long term.
Enterprise Products Partners noted that fee-based earnings have consistently been the largest contributor to its gross operating margin each year. Thus, the partnership’s business model is highly predictable and stable. Backed by this resilient business model, EPD has managed to increase its distribution for 27 consecutive years.
Currently, EPD’s distribution yield is 6.79%, but it is lower than the 6.9% yield of the composite stocks belonging to the industry. The three-year median distribution yield of EPD of 7.22% is higher than the industry’s 6.87% yield. It implies that EPD’s yield is temporarily lagging its peers right now, but historically, it has offered a stronger yield than the industry.
KMI & ENB Also Have Stable Business Models, But Lower Yields
Kinder Morgan Inc. (KMI - Free Report) and Enbridge Inc. (ENB - Free Report) are two other midstream energy majors. By the very nature of their businesses, both KMI and ENB also have predictable cash flows. This is because KMI and ENB also generate stable fee-based earnings from their respective midstream assets.
The current dividend yields of 4.2% for KMI and 5.6% for ENB, however, are lower than Enterprise Products’ yield.
EPD’s Price Performance, Valuation & Estimates
Units of EPD have gained 6.5% over the past year, against the 7.1% decline of the composite stocks belonging to the industry.
From a valuation standpoint, EPD trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.61X. This is in line with the broader industry average.
The Zacks Consensus Estimate for EPD’s 2025 earnings has seen downward revisions over the past seven days.
Enterprise Products currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.