The World’s Leading Oil and Gas Partnership

People are looking for more ways to make income in this economy. Many people have realized that inflation is not about to disappear.

To fight inflation and offset its destruction of your purchasing power, you need to invest in safe, high-dividend-paying stocks. But you also need to find stocks that give you the opportunity for significant capital gains.

However, right now, many investors are having a hard time finding that.

But there are always exceptions… like my #1 Oil and Gas Royalty… and the company in this report.

Here’s an under-the-radar energy opportunity that can be just as profitable as royalties over the next few years…

Finding the Right Partner

Founded in 1968 and based in Houston, Texas, Enterprise Products Partners (NYSE: EPD) is an oil and gas midstream energy services company.

“Midstream” refers to the fact that the company does not produce oil and gas but stores and transports them to the places where they will be refined. It owns several of the colossal oil and gas pipelines that carry the lifeblood of the modern world.

In all, Enterprise’s portfolio includes more than 50,000 miles of pipelines. On top of that, it has the capacity to store over 300 million barrels of NGLs, crude oil, petrochemicals and refined products. Plus the company has 14 billion cubic feet of natural gas storage capacity. It also operates a number of ports, processing plants and refineries.

I think of Enterprise as a commodity transportation company – a pipeline operation, primarily – that acts as a toll collector for S&P 500 companies that need to ship their products.

Consider this… Between the pandemic and economic instability, many businesses, like movie theaters, restaurants and retail stores, are being forced to rethink how they operate.

But one thing people will always need, at least for the foreseeable future, is fuel – specifically, oil and natural gas.

And although several oil and gas producers had record profits in 2022, many have had dramatic ups and downs over the years. Major oil players’ profits were down by about a third in 2023 as prices retreated from the spike caused by Russia’s invasion of Ukraine. Prices normalized around the ongoing conflict in Eastern Europe.

Oil prices trended higher the first half of 2024 but saw a downtrend in the second half of the year as a result of offsetting production from OPEC+ and non-OPEC+ members and weakening global demand. While a dip in oil prices is expected in 2025 due to strong global growth in production of petroleum and slower demand growth... oil and gas are still essential commodities that are used in many aspects of daily life. 

As a midstream company with a reliable business model, Enterprise offers you a lucrative and safe way to rake in steady profits and even more when energy prices rise.

Just like a tollbooth attendant, it collects fees to the tune of billions of dollars for transporting fuel through its pipelines.

Demand for fuel is diverse, coming from transportation, electricity generation, manufacturing and more.

This gives Enterprise plenty of oil and gas volume for charging pipeline tolls. And ample room to raise prices.

Moreover, oil and gas companies are content to pay the toll, even when it periodically increases. Why? Because building and maintaining their own pipelines would be extremely expensive, time-consuming and inefficient.

Using Enterprise, oil and gas companies can deliver their products to Americans across the country at a negligible cost to themselves… while generating record profits for the toll collector.

Pipeline Profits

2023 marked the 25th year as a public company for Enterprise. This is a remarkable milestone anniversary while posting a strong year of earnings.

The midstream pipeline systems moved a record 12.2 million equivalent barrels per day (BPD) of hydrocarbons in 2023… that’s a 9% increase from the previous year. 

And metrics for the third and fourth quarters of 2024 were trending in the right direction… up. Enterprise reported $13.8 billion in revenue for Q3, and a $14.2 billion for Q4.

Enterprise is structured as a master limited partnership (MLP). As a result, investors own units, not shares. (And MLPs pay distributions, not dividends.)

Distributable Cash Flow (DCF) was $2.2 billion for the fourth quarter of 2024, a 5% increase year over year. And as a result, distributions increased by 7% to $2.69 per common unit for 2024.

What’s more, Enterprise has raised the distribution every year since 1998.

Best of all, this company is in a stable industry that is recession-resistant and is set up for incredible growth in the years ahead.

Yet, due to the lingering economic effects of the pandemic, global economic uncertainties and increased adoption of electric vehicles (EVs)… oil and gas consumption has been down. But as the economy bounces back, more oil and gas will flow through the company’s pipelines.

And while Enterprise doesn’t sell oil and gas, their prices affect the company’s stock and the stocks of most oil and gas MLPs as well.

Because Enterprise is an MLP, its distribution is tax-deferred, as it is considered a return of capital.

Return of capital is not taxed as income. Instead, it lowers your cost basis and increases your capital gains when you sell the stock.

And that distribution is as juicy as an overripe nectarine. Enterprise currently pays a quarterly distribution of $0.54 per unit, which comes out to a 6.7% yield on a stock that costs about $29 as of this writing. Again, that’s a 6.7% tax-deferred yield.

The company has raised its distribution every year for 26 years.

Enterprise’s clients include some serious heavy hitters in the oil and gas industry. Major producers like Chevron, Exxon Mobil and Occidental Petroleum pay Enterprise to run their products through its pipelines.

With a network that big and friends and allies that powerful, it should come as no surprise that Enterprise has a healthy balance sheet.

In 2020, it raked in $27.2 billion in revenue. For 2021, sales soared 50% to $40.8 billion. Despite the huge growth in 2021… 2022 revenue jumped another 42% to $58.2 billion.

Net income increased 18.4% to $5.49 billion in 2022 from $4.63 billion in 2021.

And despite lower oil and gas prices in 2023, Enterprise reported results that were similar (some metrics are even better) to its outstanding results in 2022.

For the third quarter of 2023, Enterprise reported net income of $1.3 billion, or $0.60 per common unit compared with $1.4 billion, or $0.62 per common unit for the third quarter of 2022.

For fiscal year 2023 ending December 31, 2023, net income was $5.6 billion, or $2.50 per common unit compared with $5.5 billion, or $2.40 per common unit for the same period in 2022.

Profits continued to grow in 2024… net income was $5.9 billion for fiscal year ending December 31, 2024, a 6.7% increase year over year.

Large, Strong and Growing

Enterprise made some big moves recently that greatly expanded its business footprint.

Most notable was the $3.25 billion acquisition of fellow pipeline operator Navitas Midstream Partners. The acquisition adds approximately 1,750 miles of pipelines and over 1 billion cubic feet per day of natural gas processing capacity.

Additional capital investments included $1.4 billion in growth capital projects, $160 million for purchases of pipelines and related assets, and $372 million in sustaining capital expenditures.

In October 2024, Enterprise announced that the company had completed its acquisition of Piñon Midstream in a debt-free transaction for $950 million in cash consideration. Piñon Midstream’s assets provide natural gas gathering and treating services in the eastern flank of the Delaware Basin. Enterprise believes these assets accelerate its entry into the area by at least three or four years.

If you act quickly before the global economy recovers, you can lock in an over 6.7% yield at a bargain price.

Take advantage of the low price and high yield before Enterprise bounces back.

Action to Take: Buy Enterprise Products Partners (NYSE: EPD) at market. Set a 25% trailing stop to protect your principal and profits.

Big Payouts and Big Potential

Enterprise is the under-the-radar oil and gas play to make right now.

Between Enterprise’s low payout ratio, its incredible yield and its history of raising its distribution, it really is the perfect way to play surges in oil and gas demand.

The company’s leadership believes Enterprise is set up for incredible growth in the coming years.

No matter what the future brings and no matter what happens in the wider world, the oil must flow…

And it will flow through Enterprise’s pipelines while you profit from the tolls.

Enterprise remains my favorite play in the sector. It should be added to your portfolio if you don’t yet own it.