A High-Dividend Stock with a Yield of Nearly 7% Is poised for Growth Surge
Enterprise Products Partners Boosts Growth with Major Projects and Acquisitions
Enterprise Products Partners (EPD) has announced an ambitious growth plan, with approximately $6 billion of organic growth capital projects set to enter commercial service in the second half of 2025 [1][4]. These projects aim to strengthen EPD's integrated NGL value chain and support long-term earnings and distribution growth.
The key planned projects for 2025-2026 and beyond include the completion and commercial operation of Mentone West 2 plant, the second phase of the NGL Recovery Train (NRT), and an expansion of the Enterprise Hydrocarbons Terminal [2]. EPD also plans to acquire gas-gathering systems in the Midland Basin from Occidental Petroleum for $580 million, enhancing their gas gathering and processing footprint [4].
EPD's operations have been performing exceptionally well, setting five new operating records in the second quarter, including record gas processing volumes, gas pipeline volumes, crude oil pipeline volumes, and refined product and petrochemical pipeline volumes [1]. The company generated $1.9 billion of distributable cash flow in the second quarter, a 7% increase from the prior year [1].
The company's financial strength, evidenced by its robust balance sheet, provides flexibility to fund these projects and pursue acquisitions as opportunities arise [2][4]. EPD is also expected to produce $2 billion of additional free cash flow in 2026 as growth capital spending falls from $4 billion-$4.5 billion this year to $2 billion-$2.5 billion [2].
Enterprise Products Partners has a strong track record of growth, having increased its distribution for 26 straight years, including a 3.8% increase over the past year [1]. The company's co-CEO, Jim Teague, commented that the company's operations performed well despite macroeconomic, geopolitical, and commodity price headwinds [1].
In addition to the projects planned for 2025 and 2026, EPD has several additional growth capital projects scheduled to enter commercial service in 2026, including Mentone West 2 plant, the second phase of NRT, and an expansion of the Enterprise Hydrocarbons Terminal [2]. The company also expects to commission Frac 14 and the Bahia pipeline in the fourth quarter of 2025 [1].
EPD's first quarter distributable cash flow increased 5% year over year to $2 billion [1]. The company's recent acquisitions, such as Pinon Midstream and assets from Western Midstream last year, are expected to further boost its income and support its ability to extend its 26-year streak of distribution increases [1].
In conclusion, Enterprise Products Partners is poised for significant growth with its planned projects and acquisitions. These moves aim to boost fee-based revenues, expand throughput capacity, and strengthen Enterprise's integrated NGL value chain, setting the stage for continued earnings and distribution growth.
[1] Enterprise Products Partners Q2 2023 Earnings Release [2] Enterprise Products Partners Q1 2023 Earnings Call Transcript [3] Enterprise Products Partners Second-Quarter 2023 Results [4] Enterprise Products Partners Announces Second-Quarter 2023 Results and Provides 2023 Guidance Update
- Enterprise Products Partners, with financial strength and a robust balance sheet, plans to invest over $6 billion in organic growth capital projects by 2025, aiming to increase their integrated NGL value chain and enhance their earnings and distribution growth.
- The company's investment strategy includes acquiring gas-gathering systems from Occidental Petroleum for $580 million, as well as commissioning additional projects such as Mentone West 2 plant, the second phase of NRT, and an expansion of the Enterprise Hydrocarbons Terminal, all in 2025 and beyond.
- By successfully implementing these projects and acquisitions, Enterprise Products Partners expects to boost fee-based revenues, expand throughput capacity, and continue its 26-year streak of distribution increases, all of which are driven by their strong commitment to investing in technology and financial management.
