Is Enterprise Products Partners Stock a Buy?

Enterprise Products Partners (NYSE: EPD) operates in the deeply out-of-favor North American energy sector. That helps explain why the units are down roughly 40% so far in 2020, with the distribution yield spiking above 10%.

The big question for dividend investors is whether this is an opportunity to get in on the cheap, or a sign that Enterprise Products Partners is in for big trouble. Here are some key factors to consider before you pull the trigger on this high-yield stock.

Enterprise Products Partners is a master limited partnership that operates in the midstream sector of the North American energy market. This is a vital piece of information to understand. It owns the pipelines, storage, transportation, and processing assets that help move oil and natural gas around. Roughly 85% of its gross margin is fee-based, with customers paying for the use of its portfolio of assets. It is not an exploration and production (E&P) company, where oil and natural gas prices dictate top- and bottom-line performance.

Source Fool.com