Strategies to Enhance Tax Efficiency for Investors
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 15 2026
0mins
Source: CNBC
- Tax Efficiency Improvement: According to Bank of America, a tax-aware portfolio achieved a 7.4% annualized return over 30 years, compared to 5.9% for a tax-insensitive portfolio, highlighting the significant impact of tax management on long-term returns.
- Buybacks Over Dividends: Investors should prefer stock buybacks over dividends since buybacks are not taxable events, while dividends incur taxes ranging from 0% to 20%, although companies may reduce buybacks due to other capital commitments.
- Municipal Bond Advantages: Municipal bonds provide federal tax-exempt income, and residents of the issuing state can enjoy additional state and local tax exemptions, with tax-equivalent yields potentially exceeding Treasuries by 70 basis points, making them suitable for high-tax investors.
- Direct MLP Ownership: Master limited partnerships (MLPs) offer attractive yields but should be owned directly to avoid extra tax burdens, as distributions are treated as a return of capital, increasing investors' cost basis; recommended high-rated MLPs include DT Midstream, Energy Transfer, and Enterprise Products Partners.
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Analyst Views on EPD
Wall Street analysts forecast EPD stock price to fall
12 Analyst Rating
6 Buy
5 Hold
1 Sell
Moderate Buy
Current: 36.450
Low
33.00
Averages
35.17
High
38.00
Current: 36.450
Low
33.00
Averages
35.17
High
38.00
About EPD
Enterprise Products Partners L.P. is a provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products and petrochemicals. Its NGL Pipelines & Services segment includes natural gas processing and related NGL marketing activities, NGL pipelines, NGL fractionation facilities, NGL and related product storage facilities and NGL marine terminals. Its Crude Oil Pipelines & Services segment includes crude oil pipelines, crude oil storage and marine terminals and related crude oil marketing activities. Its Natural Gas Pipelines & Services segment includes natural gas pipeline systems that provide for the gathering, treating and transportation of natural gas. Its Petrochemical & Refined Products Services segment includes propylene production facilities; butane isomerization complex and related deisobutanizer (DIB) operations; octane enhancement, iBDH and HPIB production facilities; refined products pipelines, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Brookfield Infrastructure: Brookfield Infrastructure offers a dividend yield of 4.5%, backed by stable cash flows and long-term contracts, with expected FFO growth exceeding 10% per share, supporting annual dividend growth of 5% to 9%, showcasing its strong performance in infrastructure investment.
- Clean Energy Investment: Clearway Energy boasts a dividend yield exceeding 4.5% and plans to invest over $3 billion in new clean energy projects, with anticipated annual cash flow growth rates of 7% to 8% through 2030, continuously driving dividend increases.
- Enterprise Products Partners: Enterprise Products Partners has a distribution yield over 6%, comfortably covering its payout at 1.8 times last quarter, retaining $1.5 billion for reinvestment, with $5.3 billion in major capital projects expected to enter commercial service next year, enhancing its distribution capacity.
- Advantage of Stable Cash Flows: The three companies, Brookfield, Clearway, and Enterprise Products Partners, possess stable cash flows that enable them to support high-yield dividends and growth strategies, making them ideal high-yield stock options for investors in the current market environment.
See More
Brookfield Infrastructure Plans Dividend Increase
- Dividend Growth Outlook: Brookfield Infrastructure aims to increase its dividend by 5% to 9% annually, which will continue to attract investors, especially given the S&P 500's dividend yield nearing historical lows.
- Cash Flow Stability: Clearway Energy expects its cash flow per share to grow at an annual rate exceeding 5%, supporting its strategy of increasing dividends every quarter since 2020, showcasing strong growth potential in the clean energy sector.
- Long-term Investment Projects: Enterprise Products Partners is currently constructing $5.3 billion in major capital projects, including new gas processing plants and pipeline expansions, expected to enter commercial service by the end of next year, further enhancing its distribution yield of over 6%.
- High-Yield Stock Selection: The stable cash flows of Brookfield, Clearway, and Enterprise Products Partners make them ideal high-yield stocks for investors seeking reliable income sources in the current market environment.
See More
NextEra and Enterprise Shine in Energy Markets
- NextEra Acquisition Plan: NextEra Energy announced a $67 billion deal to acquire Dominion Energy, which, despite requiring multiple regulatory approvals, will position it as the largest electricity provider on the U.S. East Coast, enhancing its market presence in both traditional and renewable energy sectors once completed.
- Significant Revenue Growth: Over the past three years, NextEra's annual revenue surged from $22.8 billion to $26.5 billion, demonstrating impressive growth in a highly competitive energy industry, with profitability fluctuating but remaining robust between $6.8 billion and $7.3 billion.
- Attractive High Dividend: With a dividend yield of 2.9% and a streak of 32 consecutive years of increases, NextEra's management is aware of the importance of maintaining high yields despite market concerns over the acquisition's impact on stock price.
- Enterprise's Stable Earnings: Enterprise Products Partners reported operational cash flow of $7.5 billion in 2023, with over $2.1 billion in the first quarter, ensuring a nearly 6% high dividend payout, showcasing its stability and attractiveness amid energy price volatility.
See More
Energy Sector Update: Investment Opportunities in NextEra and Enterprise
- NextEra Acquisition: NextEra Energy announced a $67 billion acquisition of Dominion Energy, which, despite requiring extensive regulatory approvals, will position it as the largest electricity provider on the U.S. East Coast, enhancing its market presence in both traditional and renewable energy sectors once completed.
- Significant Revenue Growth: Over the past three years, NextEra's annual revenue increased from $22.8 billion to $26.5 billion, demonstrating impressive growth in a challenging energy sector, with profitability fluctuating but remaining robust between $6.8 billion and $7.3 billion.
- Enterprise's Competitive Edge: Enterprise Products Partners, a midstream company, reported operational DCF of $7.9 billion in 2022, with projections of $7.5 billion for 2023, showcasing its stable business model and a high dividend yield of approximately 6%, appealing to income investors.
- AI Demand Driving Growth: Both companies are poised to benefit from the surging energy needs of data centers, with NextEra and Enterprise capable of leveraging their extensive infrastructure to meet this demand, thereby solidifying their competitive advantages in the energy market.
See More
AbbVie, Chevron, and Enterprise Products' Dividend Prospects
- AbbVie's Dividend King Status: AbbVie has increased its dividend for 54 consecutive years, boasting a dividend yield exceeding 3%, with seven of its twelve blockbuster drugs generating over $2 billion annually, indicating strong growth potential that is likely to drive stock price appreciation.
- Chevron's Stable Returns: Chevron has raised its dividend for 39 years, currently yielding 3.8%, and can sustain dividends and capital expenditures even if oil prices fall below $50 per barrel, showcasing robust financial resilience and attractiveness to investors.
- Enterprise Products' High Yield: Enterprise Products Partners offers a distribution yield of 5.8% and has increased its distribution for 27 consecutive years, with a strong balance sheet and 90% of long-term contracts insulated from inflation, positioning it favorably in the energy market.
- Market Volatility and Investment Opportunities: While the likelihood of rate cuts remains low due to rising inflation and a strong job market, this dynamic makes stable income investments more appealing, with high-dividend stocks like AbbVie, Chevron, and Enterprise Products becoming top picks for investors.
See More
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- AbbVie's Strong Growth: AbbVie markets 12 blockbuster drugs, with 7 generating over $2 billion in annual sales, and boasts a 54-year streak of dividend increases, currently yielding 3%, positioning it strongly in the pharmaceutical sector.
- Chevron's Stable Returns: Chevron has increased its dividend for 39 consecutive years, with a current yield of 3.8%, and has repurchased shares in 18 of the last 22 years, demonstrating a strong commitment to shareholder returns, with expected annual EPS growth of over 10%.
- High Yield from Enterprise Products: Enterprise Products Partners offers a distribution yield of 5.8% and has increased distributions for 27 consecutive years, supported by a strong balance sheet and high credit rating, indicating continued growth potential.
- Market Environment Impact: With rising inflation and a strong job market, increased market volatility may occur, yet high-yield stocks like AbbVie, Chevron, and Enterprise Products are likely to attract income-seeking investors, potentially driving their stock prices higher.
See More
