The Allure of Passive Income Investments
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Source: Fool
- Infrastructure Investment Returns: Brookfield Infrastructure generated $2.6 billion in cash flow last year, paying out about 75% in dividends, with a current yield of 3.6%, which is three times that of the S&P 500, demonstrating its stable cash flow and long-term growth potential.
- Consistent Dividend Growth: Enterprise Products Partners increased its dividend by 2.8% over the past year, extending its growth streak to 27 consecutive years, and expects to invest at least $2.5 billion in expansion projects this year to support future cash flow and dividend growth.
- Stability of REITs: Realty Income has declared dividends for 667 consecutive months since its inception, increasing payouts every year for 31 years, with a current yield of 5%, showcasing its strong financial health and ability to sustain growth.
- Diversified Investment Strategy: Realty Income strategically invests in high-quality logistics and gaming properties, leveraging a $14 trillion market opportunity to ensure future income growth, thereby supporting its ongoing dividend policy.
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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: 37.210
Low
33.00
Averages
35.17
High
38.00
Current: 37.210
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.
Enterprise Products Partners Growth Potential Analysis
- Stable Income Source: Enterprise Products Partners has seen its stock price rise by 68% over the past five years, with a total return of 141%, highlighting its appeal as a reliable income stock, especially in a volatile market environment.
- Cash Flow Growth: From 2020 to 2024, the company's distributable cash flow (DCF) is expected to increase from $6.41 billion to $7.84 billion, with the distribution coverage ratio improving from 1.6x to 1.7x, indicating a continued strengthening of its financial health.
- Profitability Improvement: Earnings per unit (EPU) is projected to rise from $1.71 in 2020 to $2.69 in 2024, reflecting the company's success in expanding its pipeline network, particularly in key areas like the Permian Basin.
- Future Stock Price Forecast: Analysts expect the EPU to grow at a CAGR of 5.6% from 2024 to 2028, reaching $3.35, and if this growth continues through 2031, the stock price could potentially increase by about 40% to $52 over the next five years.
See More
Investment Opportunities in Midstream Infrastructure
- Rising Energy Demand: Over the next few decades, electricity demand will be driven by data centers, AI infrastructure, and industrial reshoring, with natural gas remaining a crucial fuel for stability when renewables cannot meet the load.
- Midstream Company Advantages: Midstream infrastructure firms like Kinder Morgan and Energy Transfer generate stable cash flows by charging transportation and storage fees, making their business models particularly attractive in an environment where reliable income is hard to find.
- Diverse Investment Options: Companies like Plains All American and MPLX focus on crude oil and natural gas infrastructure, offering yields that often reach into the high single digits, appealing to investors seeking stable income while mitigating exploration risks.
- ETF Investment Convenience: The InfraCap MLP ETF provides diversified exposure to the midstream sector, simplifying tax reporting and appealing to investors who wish to avoid the complexities of K-1 forms while still benefiting from high yields.
See More
High-Yield Investment Opportunities in Energy Midstream Stocks
- Energy Transition Potential: Energy Transfer (ET) recently increased its annual distribution by over 3% to $1.34 per share, providing an approximate 7.4% forward yield, demonstrating a strong cash flow coverage ratio of 1.7 times, which boosts investor confidence.
- Growth Investment Plans: Energy Transfer plans to invest up to $5.5 billion in growth capex in 2025 to capitalize on opportunities arising from the artificial intelligence data center buildout, further solidifying its market position in the low-cost natural gas-rich Permian Basin.
- Stable Dividend Growth: Enterprise Products Partners (EPD) has increased its distribution for 27 consecutive years, currently yielding about 6.3%, and is expected to grow at a rate of 3% annually, showcasing resilience amid economic fluctuations.
- Flexible Financial Strategy: EPD is reducing its growth capex from $4.4 billion to a range of $2.5 billion to $2.9 billion, freeing up more discretionary cash flow for debt repayment, stock buybacks, or acquisitions, with adjusted EBITDA and cash flow projected to grow by double digits in 2027.
See More
Energy Transfer and Enterprise Products: High-Yield Potential
- Energy Transfer Dividend Increase: Energy Transfer recently raised its distribution by over 3%, resulting in an annual payout of $1.34 and a forward yield of approximately 7.4%, indicating strong growth potential within high-yield stocks.
- Robust Cash Flow Coverage: The company reported a distributable cash flow coverage ratio of 1.7 times in the third quarter, demonstrating the sustainability of its dividend payments, while an improved balance sheet and the highest percentage of take-or-pay contracts in its history provide strong support for future growth.
- Enterprise Products Stability: Enterprise Products Partners has increased its distribution for the 27th consecutive year, currently yielding about 6.3%, with a coverage ratio of 1.8 times in the fourth quarter, showcasing its stability and attractiveness amid economic fluctuations.
- Growth Investment Plans: Although Enterprise Products will reduce its growth capex from $4.4 billion to a range of $2.5 billion to $2.9 billion, it expects adjusted EBITDA and cash flow to grow by double digits by 2027, indicating strong future growth potential.
See More
The Allure of Passive Income Investments
- Infrastructure Investment Returns: Brookfield Infrastructure generated $2.6 billion in cash flow last year, paying out about 75% in dividends, with a current yield of 3.6%, which is three times that of the S&P 500, demonstrating its stable cash flow and long-term growth potential.
- Consistent Dividend Growth: Enterprise Products Partners increased its dividend by 2.8% over the past year, extending its growth streak to 27 consecutive years, and expects to invest at least $2.5 billion in expansion projects this year to support future cash flow and dividend growth.
- Stability of REITs: Realty Income has declared dividends for 667 consecutive months since its inception, increasing payouts every year for 31 years, with a current yield of 5%, showcasing its strong financial health and ability to sustain growth.
- Diversified Investment Strategy: Realty Income strategically invests in high-quality logistics and gaming properties, leveraging a $14 trillion market opportunity to ensure future income growth, thereby supporting its ongoing dividend policy.
See More
Three High-Yield Stocks Continue Dividend Growth
- Brookfield Infrastructure: The company has delivered its 17th consecutive annual dividend increase, recently raising its dividend by 6%, with last year's cash flow reaching $2.6 billion, of which about 75% was paid out in dividends, and a current yield of 3.6%, three times that of the S&P 500, indicating strong cash flow stability and growth potential.
- Enterprise Products Partners: As a leading U.S. energy midstream company, it has increased its distribution for 27 consecutive years, with a recent 2.8% increase, and plans to complete $6 billion in expansion projects by 2026, which is expected to drive earnings growth and support future distribution increases.
- Realty Income: This REIT has declared 667 consecutive monthly dividends and increased its payout for 113 straight quarters, with a current yield of 5%, and its conservative payout ratio and strong balance sheet enable continued investment in income-generating properties, supporting future dividend growth.
- Investment Opportunities: The high-yield dividends from Brookfield, Enterprise Products, and Realty Income attract investors, and as these companies continue to increase their dividends, investors' passive income steadily grows, aiding in the pursuit of financial freedom.
See More
Enterprise Products Partners Growth Potential Analysis
- Stable Income Source: Enterprise Products Partners has seen its stock price rise by 68% over the past five years, with a total return of 141%, highlighting its appeal as a reliable income stock, especially in a volatile market environment.
- Cash Flow Growth: From 2020 to 2024, the company's distributable cash flow (DCF) is expected to increase from $6.41 billion to $7.84 billion, with the distribution coverage ratio improving from 1.6x to 1.7x, indicating a continued strengthening of its financial health.
- Profitability Improvement: Earnings per unit (EPU) is projected to rise from $1.71 in 2020 to $2.69 in 2024, reflecting the company's success in expanding its pipeline network, particularly in key areas like the Permian Basin.
- Future Stock Price Forecast: Analysts expect the EPU to grow at a CAGR of 5.6% from 2024 to 2028, reaching $3.35, and if this growth continues through 2031, the stock price could potentially increase by about 40% to $52 over the next five years.
See More
Investment Opportunities in Midstream Infrastructure
- Rising Energy Demand: Over the next few decades, electricity demand will be driven by data centers, AI infrastructure, and industrial reshoring, with natural gas remaining a crucial fuel for stability when renewables cannot meet the load.
- Midstream Company Advantages: Midstream infrastructure firms like Kinder Morgan and Energy Transfer generate stable cash flows by charging transportation and storage fees, making their business models particularly attractive in an environment where reliable income is hard to find.
- Diverse Investment Options: Companies like Plains All American and MPLX focus on crude oil and natural gas infrastructure, offering yields that often reach into the high single digits, appealing to investors seeking stable income while mitigating exploration risks.
- ETF Investment Convenience: The InfraCap MLP ETF provides diversified exposure to the midstream sector, simplifying tax reporting and appealing to investors who wish to avoid the complexities of K-1 forms while still benefiting from high yields.
See More
High-Yield Investment Opportunities in Energy Midstream Stocks
- Energy Transition Potential: Energy Transfer (ET) recently increased its annual distribution by over 3% to $1.34 per share, providing an approximate 7.4% forward yield, demonstrating a strong cash flow coverage ratio of 1.7 times, which boosts investor confidence.
- Growth Investment Plans: Energy Transfer plans to invest up to $5.5 billion in growth capex in 2025 to capitalize on opportunities arising from the artificial intelligence data center buildout, further solidifying its market position in the low-cost natural gas-rich Permian Basin.
- Stable Dividend Growth: Enterprise Products Partners (EPD) has increased its distribution for 27 consecutive years, currently yielding about 6.3%, and is expected to grow at a rate of 3% annually, showcasing resilience amid economic fluctuations.
- Flexible Financial Strategy: EPD is reducing its growth capex from $4.4 billion to a range of $2.5 billion to $2.9 billion, freeing up more discretionary cash flow for debt repayment, stock buybacks, or acquisitions, with adjusted EBITDA and cash flow projected to grow by double digits in 2027.
See More
Energy Transfer and Enterprise Products: High-Yield Potential
- Energy Transfer Dividend Increase: Energy Transfer recently raised its distribution by over 3%, resulting in an annual payout of $1.34 and a forward yield of approximately 7.4%, indicating strong growth potential within high-yield stocks.
- Robust Cash Flow Coverage: The company reported a distributable cash flow coverage ratio of 1.7 times in the third quarter, demonstrating the sustainability of its dividend payments, while an improved balance sheet and the highest percentage of take-or-pay contracts in its history provide strong support for future growth.
- Enterprise Products Stability: Enterprise Products Partners has increased its distribution for the 27th consecutive year, currently yielding about 6.3%, with a coverage ratio of 1.8 times in the fourth quarter, showcasing its stability and attractiveness amid economic fluctuations.
- Growth Investment Plans: Although Enterprise Products will reduce its growth capex from $4.4 billion to a range of $2.5 billion to $2.9 billion, it expects adjusted EBITDA and cash flow to grow by double digits by 2027, indicating strong future growth potential.
See More
The Allure of Passive Income Investments
- Infrastructure Investment Returns: Brookfield Infrastructure generated $2.6 billion in cash flow last year, paying out about 75% in dividends, with a current yield of 3.6%, which is three times that of the S&P 500, demonstrating its stable cash flow and long-term growth potential.
- Consistent Dividend Growth: Enterprise Products Partners increased its dividend by 2.8% over the past year, extending its growth streak to 27 consecutive years, and expects to invest at least $2.5 billion in expansion projects this year to support future cash flow and dividend growth.
- Stability of REITs: Realty Income has declared dividends for 667 consecutive months since its inception, increasing payouts every year for 31 years, with a current yield of 5%, showcasing its strong financial health and ability to sustain growth.
- Diversified Investment Strategy: Realty Income strategically invests in high-quality logistics and gaming properties, leveraging a $14 trillion market opportunity to ensure future income growth, thereby supporting its ongoing dividend policy.
See More
Three High-Yield Stocks Continue Dividend Growth
- Brookfield Infrastructure: The company has delivered its 17th consecutive annual dividend increase, recently raising its dividend by 6%, with last year's cash flow reaching $2.6 billion, of which about 75% was paid out in dividends, and a current yield of 3.6%, three times that of the S&P 500, indicating strong cash flow stability and growth potential.
- Enterprise Products Partners: As a leading U.S. energy midstream company, it has increased its distribution for 27 consecutive years, with a recent 2.8% increase, and plans to complete $6 billion in expansion projects by 2026, which is expected to drive earnings growth and support future distribution increases.
- Realty Income: This REIT has declared 667 consecutive monthly dividends and increased its payout for 113 straight quarters, with a current yield of 5%, and its conservative payout ratio and strong balance sheet enable continued investment in income-generating properties, supporting future dividend growth.
- Investment Opportunities: The high-yield dividends from Brookfield, Enterprise Products, and Realty Income attract investors, and as these companies continue to increase their dividends, investors' passive income steadily grows, aiding in the pursuit of financial freedom.
See More
