Market value: $57.3 billion
Distribution yield: 6.4%
For another blue-chip MLP play, consider Enterprise Products Partners LP (EPD, $26.54).
Enterprise Products is one of the oldest and best-respected MLPs you’re ever going to find. In an industry that has traditionally been run by cowboy capitalists, Enterprise has managed to stay remarkably level headed over the years and as reliable as Old Faithful.
Chase Robertson, Chairman of Houston, Texas-based RIA Robertson Wealth Management, says, “Enterprise Products Partners has been a core holding of our income portfolios for over a decade. It’s been a dependable workhorse for us, consistently raising its distribution like clockwork.”
Since going public in 1998, Enterprise has grown into one of the largest energy infrastructure companies in the world with approximately 50,000 miles of natural gas, natural gas liquids, crude oil and refined products pipelines and 260 million barrels of storage capacity.
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Furthermore, like Magellan Midstream, Enterprise has eliminated the single biggest conflict of interest that has long plagued the MLP space: incentive distribution rights (IDRs). In a traditional IDR arrangement, the MLP’s general partner takes a disproportionate share of any distribution hikes to shareholders, which incentivizes them to bet the farm by raising distributions at an unsustainable pace. EPD and MMP eliminated IDRs years ago, which partly explains their more conservative profile.
Enterprise Products has raised its distribution every year since its 1998 IPO, and over the past decade, its annual distribution hikes have averaged just under 6%. At today’s prices, EPD shares yield 6.4%, which is exceptionally high by this MLP’s standards.
