This year is big forEnterprise Products Partners(EPD 0.54%). The master limited partnership (MLP) is in the midst of completing a major wave of expansion projects that will fuel growth in the coming quarters. That's allowing the midstream giant to continue increasing its distribution. It recently gave investors another raise, marking its 25th straight year of distribution growth. The MLP now yields 7.5%.
The company's distribution growth engine should keep humming along. It recently added a couple more projects to its backlog that should drive growth in the coming years.
A wave of additional cash flow is coming
Enterprise Products Partners had a busy second quarter. The MLP placed four major capital projects into service:
- A 400 million cubic feet per day expansion of the Haynesville Extension of its Acadian natural gaspipelinesystem. It will support additional gas volumes in the region.
- The Poseidonnatural gasprocessing plant in the Midland Basin. The project will enable Enterprise to process more raw natural gas to extract natural gas liquids (NGLs).
- Its 12th NGL fractionator in Texas. This facility will enable the company to separate NGLs into various streams, like propane.
- Its second propane dehydrogenation plant (PDH) in Texas. The facility will turn propane into propylene, an important petrochemical used in many products.
The company invested $2.5 billion into these projects. It secured long-term, fee-based contracts to support most of these projects. They'll generate stable cash flow for the company.
Those projects are part of the $3.8 billion of expansions Enterprise Products Partners expects to place into service by the end of this year. It also remains on schedule to start up its Mentone II natural gas processing plant in the Delaware Basin during the fourth quarter. Meanwhile, it anticipates completing the first phase of its Texas Western products pipeline system by the end of the year. These projects should also supply the MLP with incremental fee-based cash flow.
Starting to refuel the growth engine
Enterprise Products Partners entered the second quarter with $6.1 billion of major capital projects under construction. While it completed four projects in the period, it added two more to its backlog. The company expects to invest around $500 million to expand its Beaumont Terminal and on natural gas gathering expansions in the Permian Basin. With those new additions, Enterprise entered August with $4.1 billion of projects in its backlog.
The MLP has more growth projects under development. It currently expects to invest between $2.4 billion and $2.8 billion on capital projects this year, $2.4 billion of which it has already approved. Meanwhile, it sees 2024 capital spending between $1.4 billion and $2.5 billion, with the low-end representing approved projects.
One of the biggest projects it currently has under development is the Sea Port Oil Terminal (SPOT). The company received a record of decision from the U.S. Department of Transportation last November, which marked a key milestone in the process needed to obtain a license to build the project. Enterprise has already secured an anchor customer for the project in oil giantChevronand a joint venture partner to help finance construction in energy infrastructure behemothEnbridge. The companies hope to have this project in service by the second half of 2026 to early 2027.
The MLP is also exploring lower carbon investment opportunities. Enterprise formed an evolutionary technology group in 2021 to pursue commercial opportunities in carbon capture and storage,hydrogen, and low-carbon fuels. It's working with several industry partners on potential low-carbon solutions, including a carbon capture and storage solution with Chevron. It could repurpose existing assets and build new facilities to support the flow of lower-carbon energy.
Enterprise's high-yielding payout will keep rising
Enterprise Products Partners has increased its distribution by 5.3% over the past year to hit the quarter-century milestone for annual growth. It has plenty of fuel to continue growing its payout in the coming years. The company recently completed $2.5 billion of projects and has more on the way. Meanwhile, it has added new projects to the backlog, with more under development. That visible growth makes the MLP a great investment for income seekers since it looks like a lock that its already attractive payout will continue rising.
Matthew DiLallo has positions in Enbridge and Enterprise Products Partners. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Chevron and Enterprise Products Partners. The Motley Fool has a disclosure policy.
FAQs
20 high-dividend stocks
| Company | Dividend Yield |
|---|
| Franklin BSP Realty Trust Inc. (FBRT) | 11.09% |
| Pennymac Mortgage Investment Trust (PMT) | 11.00% |
| International Seaways Inc (INSW) | 10.55% |
| Eagle Bancorp Inc (MD) (EGBN) | 9.11% |
17 more rowsMay 8, 2024
Monthly dividends make budgeting easier by providing more frequent cash flow to income investors. May 6, 2024, at 2:50 p.m. Stocks are this list reward investors with a healthy, steady flow of additional income through dividends.
Should I invest in high dividend stocks? ›
Key Takeaways. Many investors look to dividend-paying stocks to generate income in addition to capital gains. A high dividend yield, however, may not always be a good sign, since the company is returning so much of its profits to investors (rather than growing the company.)
How much do you need to invest to live off dividends? ›
If you are considering a dividend-focused strategy, you should carefully assess your income needs and risk tolerance. For example, if you require an income of 100,000 per year and were looking at a dividend yield of 10%, you would need to invest 1,000,000.
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|---|
| Home Depot Inc. (HD) | 2.6% |
| Merck & Co. Inc. (MRK) | 2.4% |
| Chevron Corp. (CVX) | 4% |
| Coca-Cola Co. (KO) | 3.1% |
3 more rowsTop 25 High Dividend Stocks
| Ticker | Name | Dividend Safety |
|---|
| EPD | Enterprise Products Partners | Safe |
| ENB | Enbridge | Safe |
| VZ | Verizon | Safe |
| T | AT&T | Borderline Safe |
6 more rows5 days ago
Despite their storied histories, they cut their dividends. 9 In other words, dividends are not guaranteed and are subject to macroeconomic and company-specific risks. Another downside to dividend-paying stocks is that companies that pay dividends are not usually high-growth leaders.
What is the best monthly dividend stock? ›
LTC Properties, Inc. (NYSE:LTC), one of the best dividend stocks, offers a monthly dividend of $0.19 per share. The stock's dividend yield on February 23 came in at 7.10%. Insider Monkey's database of Q4 2023 indicated that 11 hedge funds owned stakes in LTC Properties, Inc.
Which stock gives the highest return in 1 month? ›
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| S.No. | Name | CMP Rs. |
|---|
| 1. | CG Power & Indu. | 601.95 |
| 2. | Hindustan Zinc | 565.55 |
| 3. | Marico | 605.10 |
| 4. | Apar Inds. | 8255.30 |
23 more rowsThe Coca-Cola Company's ( KO ) dividend yield is 3.09%, which means that for every $100 invested in the company's stock, investors would receive $3.09 in dividends per year. The Coca-Cola Company's payout ratio is 73.72% which means that 73.72% of the company's earnings are paid out as dividends.
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| Company (ticker) | Analysts' consensus recommendation score | Analysts' consensus recommendation |
|---|
| Delta Air Lines (DAL) | 1.40 | Strong Buy |
| ServiceNow (NOW) | 1.41 | Strong Buy |
| GE Aerospace (GE) | 1.41 | Strong Buy |
| Lamb Weston (LW) | 1.42 | Strong Buy |
21 more rowsYou have to own a stock prior to the ex-dividend date in order to receive the next dividend payment. If you buy a stock on or after the ex-dividend date, you are not entitled to the next paid dividend.
How much dividend stock do I need to make $1000 a month? ›
Reinvest Your Payments
The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets. And that's okay.
Where do millionaires put their money? ›
Where do millionaires keep their money? High net worth individuals put money into different classifications of financial and real assets, including stocks, mutual funds, retirement accounts and real estate.
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To generate $1,000 per month in dividends, you'll need to build a portfolio of stocks that will produce at least $12,000 in dividends on an annual basis. Using an average dividend yield of 3% per year, you'll need a portfolio of $400,000 to generate that net income ($400,000 X 3% = $12,000).
What stocks have a 5 dividend yield? ›
Agree Realty, Clearway Energy, Oneok, Vici Properties, and Verizon all pay dividends yielding more than 5%. Those companies should be able to sustain and grow their high-yielding dividends over the long haul. That makes them great stocks to buy for a potential lifetime of dividend income.
What stock pays dividends monthly? ›
2024 Monthly Dividend Stocks List
| Ticker | Name | Dividend Yield |
|---|
| OXSQ | Oxford Square Capital | 13.04% |
| DX | Dynex Capital | 12.59% |
| GIPR | Generation Income Properties | 11.39% |
| SCM | Stellus Capital | 11.19% |
6 more rows5 days ago
