by Dividend share leader Partners for Enterprise Products (EPD) is back in the picture after management increased the payout again, raising its quarterly dividend to 49 cents per share. This brings annualized returns to an ultra-high 7.36%, well above the S&P 500 average of 1.5%.
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IBD’s Income Investor has highlighted many oil and gas pipeline stocks over the past year. Stable cash flows and a thriving energy sector have led to impressive results and superb dividend yields.
Houston-based Enterprise Products operates more than 50,000 miles of crude oil and natural gas pipelines. It also maintains natural gas storage facilities and processing sites.
Dividend stocks increase payout for 75th time
Investors in Enterprise Products expect steady dividend increases, so the latest increase comes as no surprise. In fact, since the company was founded 25 years ago, the payouts from this dividend stock have increased every year.
Most high-yield companies increase payouts just enough to maintain their status as dividend aristocrats. But Enterprise Products is aggressively increasing distributions several times a year, with an astounding 75 increases over the past quarter century.
Enterprise Products has also shown solid growth, supporting these aggressive payouts.
Fourth-quarter results on Feb. 1 showed continued strength, with earnings of 65 cents per share beating analyst estimates by 2 cents. Earnings for this dividend stock fell short, at $13.65 billion, which still represented an impressive 20.1% year-over-year growth.
Total net income of $5.5 billion in fiscal 2022 compared favorably to $4.6 billion in 2021, while earnings of $2.54 per share represented a modest increase from $2.20. Slow but steady growth is expected to continue, with earnings per share expected to rise to $2.56 and $2.64 in 2023 and 2024.
Enterprise Products kicked off 2023 by refinancing some of its debt by issuing $1.75 billion in 3- and 10-year bonds. Corporate debt remains investment grade, with a BBB+ rating from S&P Global.
Shares of Enterprise Products form a 26-week consolidation basis with a buy point of 27.46. EPD stock has held support at its 200-day line for the past month and is trading solidly above its 50-day moving average.
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