Is Enterprise Products Partners 7.7% Yield Too Good to Be True?
It's hard to point to the precise number, but there is a point at which you stop thinking "this dividend yield looks great" and start going "this dividend yield is very high. What's wrong?". With a yield of 7.7%, Enterprise Products Partners (NYSE: EPD) is starting to trend into the "what's wrong" territory. Even though the company has raised its payout every year since its IPO in 1998, the only times its yield has been higher was during the dot-com bust, the Great Recession, and the early days of the pandemic.
So let's look at whether the oil and gas pipeline company is in good enough shape to keep its payout going and why the market seems to be so sour on this stock.
One thing that Enterprise's management has done exceptionally well over the past couple of decades is preserved the company's ability to maintain & modestly grow its payout. We can point to a myriad of reasons why that is the case -- a resilient revenue stream, a conservative balance sheet, strict capital allocation guidelines -- but the one that is the most likely is the company's ownership.
Source Fool.com
