3 Reasons to Buy Enterprise Products Partners, and 1 Reason To Sell
Enterprise Products Partners (NYSE: EPD) is one of the largest midstream pipeline companies in North America. The energy assets it owns and operates are vital cogs in the industry and would be difficult to replicate or replace. There are many reasons to like Enterprise today -- for one thing, its distribution yield is toward the high end of its historical range. But there's still a pretty notable reason that investors might worry that the future won't be as bright as the past.
Master limited partnerships like Enterprise are specifically designed to pass income on to shareholders, which helps explain at least part of the generous 7.3% yield. But that number is just one of the reasons to like Enterprise. The yield is backed by more than two decades of annual increases, including a hike during last year's pandemic slowdown. Meanwhile, the distribution was covered by distributable cash flow by roughly 1.6 times in the second quarter. Stepping back, it looks like Enterprise's quarterly distribution is very safe, despite the high yield.
Image source: Getty Images.
Source Fool.com
