Enterprise Products Partners (EPD 1.60%) has done a magnificent job distributing cash to its investors. The master limited partnership (MLP) extended its distribution growth streak to 26 years in 2024, on every year since it came public. Overall, it has returned more than $55 billion in cash to its investors over the years via distributions and unit repurchases.
The MLP's distribution growth streak has continued in 2025. It recently declared its latest payment, a 1.9% increase from last quarter (up 3.9% from the year-ago level). The pipeline company should have plenty of fuel to continue growing its high-yielding distribution (6.5% current yield) in the future.
Built on a rock-solid financial foundation
Enterprise Products Partners can easily afford to dole out more cash to investors. The diversified energy midstream company generates very stable cash flow, backed primarily by long-term contracts and government-regulated rate structures. For example, it produced $2 billion of distributable cash flow in the third quarter (5% higher than the year-ago period). That was enough to cover its distribution payment by a comfortable 1.7 times, allowing the MLP to retain $808 million in cash.
The MLP also has a fortress balance sheet. It has the highest bond rating in the midstream sector at A-/A3. It backs that strong credit rating with a low leverage ratio (3.0x) and primarily low-cost, fixed-rate debt. The pipeline company has the excess cash flow and financial flexibility to return additional capital to investors and invest in growing its extensive midstream footprint.
In addition to the distribution increases, Enterprise Products Partners repurchased $219 million of its units last year. It has now utilized 57% of its $2 billion buyback program. The company was also on track to invest $3.5 billion to $3.75 billion into growth capital projects last year.
On top of that, it bought Pinon Midstream in a $950 million all-cash deal in the fourth quarter. It also purchased $400 million of assets earlier in the year.
The fuel to continue growing in 2025 and beyond
Enterprise Products Partners' growth-focused investments give it a lot of momentum heading into 2025. The Pinon Midstream deal, which closed in late October, will be accretive to its cash flow this year. The company expects the acquisition to add $0.03 per unit to its distributable cash flow in 2025 before the benefit of commercial and operating synergies.
On top of that, the MLP recently completed a couple more organic capital projects that will supply it with incremental cash flow in 2025. It finished phase 2 of its Texas Western Products System expansion in late October. The company also recently completed two more natural gas processing plants.
More expansion projects are on the way. Enterprise Products Partners plans to spend $3.5 billion to $4 billion on major capital projects this year. Notable projects include two more natural gas processing plants, the Bahia NGL Pipeline, fractionator 14, phase one of the Neches River Ethane/Propane Export Terminal, and the second phase of its Morgan's Point Flex Expansion. Those projects should all enter commercial service in the second half of this year, providing incremental cash flow growth heading into 2026.
Meanwhile, Enterprise Products Partners has several more expansion projects on track to enter commercial service in 2026, including the second phase of its Neches River Export Terminal expansion and another gas processing plant. The MLP currently expects to invest another $2 billion to $2.5 billion on these and other growth capital projects in 2026.
The MLP has additional expansion projects in the pipeline. For example, it signed an agreement with a subsidiary of Occidental Petroleum late last year to potentially develop a carbon dioxide transportation network in southeast Texas. It has also been working to develop a major offshore oil port project. These and other projects could enhance and extend its growth outlook in 2026 and beyond.
Enterprise Products Partners also has the financial flexibility to continue making accretive acquisitions as opportunities arise. These deals can enhance its growth prospects. For example, Pinon Midstream has a project underway to boost the capacity of its treating facilities from 270 million cubic feet per day (MMcf/d) to 450 MMcf/d in the second half of this year. Enterprise could expand this capacity to as much as 750 MMcf/d in the future. This incremental treating capacity could help support additional production in the region, potentially enabling the MLP to build more gas processing plants.
The steady income stream should continue rising
Enterprise Products Partners continues to do a magnificent job of steadily distributing more cash to its investors. That growth should continue, thanks to the company's strong financial profile and visible growth prospects. It makes the MLP an ideal option for those seeking a lucrative, steadily rising income stream (and are comfortable receiving a Schedule K-1 federal tax form each year).
