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Enterprise Products' Resilient Midstream Model Keeps Cash Flows Steady

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Key Takeaways

  • EPD operates a 50,000-mile pipeline network generating stable, fee-based midstream revenues.
  • EPD has returned $61B to unitholders since its IPO and raised distributions for 27 straight years.
  • Enterprise Products' $5.1B project backlog under construction helps secure future cash flows.

Enterprise Products Partners LP (EPD - Free Report) is a leading midstream player, and therefore, it has a resilient business model. EPD has a pipeline network that spans more than 50,000 miles, transporting oil, natural gas, refined products and other commodities. Thus, the partnership generates stable fee-based revenues from the midstream assets as the assets are booked by shippers for a long term.

Due to the resilience of its business model, the partnership has been able to return capital to unitholders on an ongoing basis. Since its IPO, Enterprise Products has returned $61 billion to unitholders through both repurchases and distributions. Considering the distribution story, EPD has been successful in increasing distributions for 27 consecutive years. Thus, the partnership has become successful in keeping cash flow steady at all business cycles.

Investors should know that Enterprise Products has a backlog of key capital projects valued at $5.1 billion that are currently under construction. Therefore, the midstream company has secured additional cash flows, further protecting future distribution payments. Thus, income investors should keep an eye on the stock.

KMI & ENB Also Strongly Focused on Returning Shareholders’ Capital

Kinder Morgan Inc. (KMI - Free Report) and Enbridge Inc. (ENB - Free Report) are two leading midstream companies, backed by stable business models. Both KMI and ENB have predictable cash flows that are supported by fee-based revenues. For the last eight consecutive years, KMI has increased its dividend payments.

ENB expects its annualized dividends for 2025 and 2026 to be $3.77 per share and $3.88 per share, respectively, while projecting a 3% CAGR for the 2023-2026 period.

EPD’s Price Performance, Valuation & Estimates

Units of EPD have gained 10.6% over the past year against the 3.4% decline of the composite stocks belonging to the industry.

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From a valuation standpoint, EPD trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.48X. This is below the broader industry average of 10.52X.

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The Zacks Consensus Estimate for EPD’s 2025 earnings has seen downward revisions over the past 30 days.

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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.


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Enterprise Products Partners L.P. (EPD) - free report >>

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