Enterprise Products Partners: A Passive Income Machine with Strong Potential for Growth
Monday, 15 April 2024, 09:47
Enterprise Products Partners: A Passive Income Machine with Strong Potential for Growth
Income investors should love this stock. What does it take to generate passive income? There are two essential ingredients. First, you need up-front money to invest. Second, you need an investment that regularly pays you.
The good news is that many investment alternatives pay you for owning them. There's one, in particular, that ranks among the best options, in my view. This high-yield dividend stock is a monster passive income machine.
- A pipeline powerhouse
- Enterprise Products Partners (NYSE: EPD) is a leading midstream energy company. It was founded in 1998 and is based in Houston.
- The limited partnership (LP) operates more than 50,000 miles of pipeline that transports natural gas liquids (NGLs), natural gas, and crude oil throughout much of the U.S.
- Investors can rest assured Enterprise Products Partners deploys its cash wisely. The LP has delivered an average return on invested capital (ROIC) of 12% over the last 10 years.
- What about passive income? Enterprise Products Partners provides plenty of it. The company's distribution yield currently tops 7%.
Is It Worth the Investment?
Some might think Enterprise Products Partners' focus on fossil fuels could limit its growth. However, I don't see that as a downside. The demand for natural gas and NGLs, in particular, should continue to grow. Enterprise's midstream assets will be needed for a long time to come.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.