Enterprise Products Partners (EPD 0.65%) is nearing an inflection point. The midstream giant recently completed the expansion of its Acadian Haynesville Extension natural gas pipeline. That's the first of the $3.8 billion of organic growth capital projects it expects to finish this year. 

That wave of growth projects will help move the needle for the master limited partnership (MLP) this year. It should give the company the fuel to continue increasing its already attractive 7.6%-yielding distribution.

The first of many

Enterprise Products Partners recently finished expanding its Acadian Haynesville Extension natural gas pipeline. The project will increase its natural gas takeaway capacity in the Hayneville area of Louisiana by about 400 million cubic feet per day. The company secured long-term, take-or-pay contracts with credit-worthy customers for this capacity. As a result, the project will provide the MLP with a very stable stream of incremental cash flow. 

While that project, in particular, isn't a major needle-mover for the company, it represents an important milestone. It's the first of a wave of expansion projects Enterprise Products Partners expects to finish this year. The MLP anticipates $3.8 billion of expansions will enter service by the end of 2023. Other notable ones include its second facility to convert propane into polymer grade propylene, its 12th natural gas liquids fractionator at its Chambers County complex, and two more natural gas processing plants in the Permian Basin. 

This large slate of expansion projects makes 2023 a "significant year" for the company, according to comments by co-CEO Jim Teague in the press release detailing the completion of the Acadian pipeline. He noted that these projects will generate "new sources of cash flow" for the company. They will "provide visibility to cash flow growth that will support future distribution increases to our limited partners," according to Teague. 

Meanwhile, the incremental cash flow is only part of the story. Capital spending will also come down as these projects reach completion. The company expects capital spending to decline from a range of $2.4 billion-$2.8 billion in 2023 to between $1.5 billion and $2.5 billion next year, with the low-end secured by the remaining $2.3 billion of major capital projects in its backlog that should enter service through 2025. With cash flow rising and capital spending falling, it will produce more free cash flow in the coming quarters. Further, the higher earnings will improve its already low 3.0 times leverage ratio (well within its recently lowered 2.75-3.25 times target range). These factors will give it even more financial flexibility.

More distribution growth likely

The cash flow boost from the upcoming wave of capital projects should enable Enterprise Products Partners to continue growing its distribution. The company increased its payout by 5.4% last year. That kept its growth streak alive. The MLP has delivered 24 consecutive years of distribution increases.

The company already generates plenty of cash to cover its payout. During the first quarter, it produced $1.9 billion of distributable cash flow, enough to cover its payout by a very comfortable 1.8 times. 

With cash flow expected to rise, it seems almost certain to hit the quarter-century milestone of distribution growth this year. On the first-quarter conference call, Teague noted that the company expects to "evaluate another increase midyear." Given the coming wave of expansion projects, its expanding free cash flow, and balance sheet strength, it could give investors an even bigger distribution increase this year. 

The company can also return additional cash to investors through unit repurchases. Enterprise Products Partners has about $1.3 billion remaining on its $2 billion repurchase authorization. Additional repurchases could further enhance value for investors.

Income with upside potential

Enterprise Products Partners is nearing the completion of a large slate of expansion projects. It's a notable inflection point for the MLP because it will boost its earnings, improve free cash flow, and lower its leverage ratio. That will put the company in a position to expand its already attractive distribution. It looks like a very attractive buy for income-seeking investors right now. It should provide them with lots of income and additional upside from its appreciation potential as earnings grow.