Enterprise Products Partners (EPD -0.63%) has created an amazing amount of wealth for its investors over the years. Since its IPO roughly two decades ago, the master limited partnership has generated a jaw-dropping 1,850% total return. That has obliterated the S&P 500's nearly 300% total return over that timeframe.
One of the big drivers of Enterprise's ability to create so much wealth for its investors is its steadily growing dividend. The energy company has increased it not just for 20 straight years but also in each of the past 61 consecutive quarters. That trend appears almost certain to continue. Driving that view is the company's backlog of expansion projects, which is now up to $9.1 billion. That should provide Enterprise with plenty of fuel to continue growing its 6.4%-yielding distribution to investors through at least 2023. This increasing visibility into future growth makes Enterprise an excellent stock to buy for the long haul.
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Drilling down into Enterprise's backlog
Enterprise Products Partners recently reported its third-quarter results. In addition to posting solid numbers, including generating $1.6 billion of cash flow, -- which was enough to cover its current payout by a very comfortable 1.7 times -- the company made excellent progress on the strategic front.
CEO Jim Teague stated in the earnings press release:
The third quarter was also very successful in terms of underwriting new growth projects. We were successful in sanctioning two expansions of our Midland-to-ECHO crude oil pipeline system and our second propane dehydrogenation (PDH) facility. In total, we now have $9.1 billion of growth capital projects under construction. These projects are scheduled to begin service between now and the end of 2023.
Overall, the company added a net $3.1 billion of new projects to its backlog during the quarter. That helped extend its growth visibility through 2023. Because of that, investors should have high confidence that Enterprise can continue increasing its distribution each quarter through 2023. That's a longer-term outlook than most rivals, which currently don't have much visibility past 2020. Enterprise, on the other hand, now has $3.8 billion of projects scheduled to start up in 2021 and beyond. These include not only the expansion of Midland-to-ECHO and a second PDH facility but also an expansion of its ATEX pipeline, more oil storage capacity, and another gas pipeline in Louisiana.
More projects are coming down the pipeline
In addition to the projects the company officially greenlighted during the quarter, it also made notable progress on a key one it has in development. Earlier this year, Enterprise signed long-term contracts with Chevron (CVX -0.83%) supporting the development of the Sea Port Oil Terminal (SPOT). The company would build SPOT about 30 miles off the coast of Texas. That would enable it to quickly and efficiently load supertankers capable of carrying 2 million barrels of oil to global markets. Meanwhile, the facility will allow Chevron to maximize the value of the crude oil it produces in the Permian Basin by increasing its ability to ship it to higher-priced global markets. With Chevron's support, Enterprise can sanction this project as soon as it receives government approval. Once that happens, the company will have another growth project to enhance its long-term outlook.
In addition to SPOT, Enterprise has several other expansion projects in development. These include production-driven ones like new natural gas processing plants and pipelines to move oil, natural gas, and natural gas liquids (NGLs) out of production basins like the Permian. The company also has demand-driven projects such as a third PDH facility and additional export terminals under development. Its ability to secure these opportunities will enhance its ability to continue increasing its distribution in the coming years.
A well-fueled growth engine
By adding a net $3.1 billion of new expansion projects to its backlog during the quarter, Enterprise Products Partners now has $9.1 billion of growth-focused investments under construction. Those projects will enable the company to continue growing its cash flow through at least 2023, which should allow it to keep increasing its payout through that timeframe. Add in the fact that the company has more expansions in development, and investors have even more reasons to buy it for the long-term.
