2024-06-21 09:00:00 ET
Summary
- EPD is a leading MLP with a strong track record, but has underperformed peers and the S&P 500.
- EPD's future looks promising with growing EBITDA, sustainable energy demand, and ownership alignment with investors.
- The proposed Sea Port oil export terminal and upcoming projects position EPD for growth and continued distribution increases.
Enterprise Products Partners (EPD) is often referred to as the gold standard within the MLP space. This is because of its multi-decade track record of distribution growth and building one of the largest energy infrastructure companies in the United States. EPD unitholders haven't had the best of years, considering there are other pipeline companies with larger yields, and EPD has trailed its peer group along with the S&P 500. Despite its underperformance, EPD is positioned well for the future, and it's one of the few energy infrastructure companies where there wasn't a need to reduce the distributions. EPD has gradually grown its EBITDA and is positioned to benefit from a growing demand for sustainable energy. This is one of the few companies where management is truly aligned with investors, as management ownership in EPD accounts for 32% of the common units. I am shocked that EPD is stuck below $30 when its peer group and the Alerian MLP ETF (AMLP) have double-digit appreciation over the past year. I think that EPD is undervalued, and the proposed Sea Port oil export terminal will provide a boost to investor enthusiasm and its distributable cash flow ((DCF)). Investors can take comfort in the fact that EPD has grown the distribution for the past 25 years, and there is more than enough DCF being generated to keep the growth alive for years to come....
Read the full article on Seeking Alpha
For further details see:
Enterprise Products Partners: Underperforming, But This Dividend Aristocrat Is A Buy