Should One Consider Purchasing Enterprise Products Partners' Shares at the Current Moment?
Interested in high-yielding dividend stocks? Consider Enterprise Products Partners (EPD), a master limited partnership (MLP). They bypass corporate-level taxes, passing distributions (similar to dividends) directly to shareholders, which are often taxed more favorably.
From a business perspective, EPD is an energy midstream company responsible for transporting, storing, and processing various hydrocarbons—gas, NGLs, crude oil, refined products—through an extensive network of pipelines and assets.
Three reasons make EPD a buy:
- Lucrative Distributions: Attractive forward yield of 6.3%. The distribution is well-covered by DCF, with a 1.7-times coverage ratio. EPD has low industry-standard leverage of 3 times, with a target range of 2.75 to 3.25 times.
- Transitioning to Growth Mode: Post-COVID-19 pandemic, the company is ramping up growth capex spending, from $1.6 billion in 2022 to $3.5 billion to $4 billion by 2025. Historically, EPD gains an average 13% return on its projects. This growth could boost its $9.85 billion in 2024 EBITDA by up to $520 million a year.
- Attractive Valuation: Trading at an EV/EBITDA of 10 times 2024 estimates, EPD looks undervalued. Midstream companies typically trade at 13.7 times EV/EBITDA overall, with EPD trading at a premium due to its consistent nature.
Enrichment data reveals that EPD reported Q3 2024 revenue rising 14.81%, DCF up 5%, and distribution coverage of 1.7 times. Analysts also suggest the stock has a positive outlook and could reach $40.00.
Investing in Enterprise Products Partners (EPD) could provide significant financial gains, given its attractive forward yield of 6.3%, which is well-covered by Dividend Coverage to the tune of 1.7 times. Moreover, experts in finance predict that EPD's stock could potentially reach $40.00, making it an appealing opportunity for those looking to invest in high-yielding dividend stocks.
