Publisher’s Note: This week’s Safety Net – written by Research Analyst Brittan Gibbons-O’Neill – analyzes the dividend safety of a company that’s near and dear to our hearts… Enterprise Products Partners (NYSE: EPD).
Why does the Wealthy Retirement team hold Enterprise in such high esteem?
It’s one of the many Perpetual Dividend Raisers – companies that raise their dividends year after year – recommended by Chief Income Strategist Marc Lichtenfeld in his monthly newsletter, The Oxford Income Letter.
Marc recommended Enterprise in April 2020. Since then, it is up 111% in the Compound Income Portfolio.
Check out Brittan’s analysis on Enterprise below to see if it continues to live up to the high standards Marc held it to back in April 2020.
– Rachel Gearhart, Associate Publisher
Since its peak last month, the energy sector has fallen 25%.
But finding oil and gas companies that can pay you quality and steady dividends is still possible.
In fact, the company we’re rating today is a solid pick if you’re looking for a reliable income stream.
Enterprise Products Partners is a midstream company that has more than 50,000 miles of pipelines, 260 barrels of storage capacity and 21 natural gas processing plants – making it one of the largest pipeline networks in the U.S.
Operating as the middleman protects the company… Whether customers accept or deny the delivery of products, Enterprise still gets paid.
It has a concrete stream of revenue, and because it enters into long-term contracts, its cash flow is relatively predictable.
When we covered Enterprise back in 2020, we gave it an “A.”
And since then, the company has been positioning itself even better in this space.
For a master limited partnership (MLP) like Enterprise, we’ll look at cash available for distribution (CAD), which is a measure of cash flow for MLPs.
The only year the company’s CAD faltered was 2020… but other than that, it has raised its CAD year over year.
Last year, Enterprise’s $6.6 billion in distributable cash flow more than covered its $3.9 million in dividends paid.
And this year, it’s expected to rake in $7.2 billion and will pay only 57% of that in dividends.
Speaking of dividends…
Enterprise just upped its dividend to $0.475 per quarter – up from $0.465 earlier this year and $0.45 in 2021.
In 2022, the company will pay out $1.88 per share in dividends, giving it a yield of 7.43%.
This isn’t the first time Enterprise has raised its dividend, either.
Over the 24 years of rewarding investors, the midstream player has increased its dividend almost every year… and I expect this trend to continue.
Based on its growing CAD (which more than covers its payout to shareholders) and its solid business model, Enterprise Products Partners’ dividend is definitely one of the safest on the market right now.
Dividend Safety Rating: A
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