2023-04-18 10:47:00 ET
Benjamin Graham, the investor who was a mentor to Warren Buffett, long preached that even a good company could be a bad investment if you paid too much to buy it. In other words, valuation matters, even when you are considering dividend stocks. Which is why income-focused investors might still be interested in Enterprise Products Partners (NYSE: EPD) , be timid with regard to Chevron (NYSE: CVX) , and want to hold off on Nucor (NYSE: NUE) . Here's a look at each.
Master limited partnership (MLP) Enterprise Products Partners is a giant in the North American midstream sector. It owns a virtually irreplaceable portfolio of pipelines , storage, processing, and transportation assets that help to move oil, natural gas, and the products into which they get turned around the world. The vast majority of its business is fee-based, so demand for energy, which should remain strong for years, is more important than commodity prices. The core business is very stable.
That helps explain how the MLP has managed to increase its distribution annually for 24 consecutive years. A modest amount of leverage and currently robust distribution coverage help, too. The distribution yield is a very high 7.3%. While the yield has been higher in the past, it is currently near the high side of the historical yield range. That suggests the units are trading at an attractive level.
For further details see:
Is It Too Late to Buy These 3 Brilliant Passive Income Stocks?