Stocks have rallied sharply this year. The S&P 500 has surged more than 15%, while the Nasdaq 100 has zoomed by nearly 40%. The S&P 500 now trades at more than 20 times forward earnings, while the Nasdaq 100 fetches over 27 times forward earnings. And all that means that sticks aren't nearly as cheap as they were at the beginning of the year.  

However, even though most stocks trade at higher valuations these days, some are still pretty cheap. Enterprise Products Partners (EPD -0.56%) stands out for its attractive valuation. It's a big driver of the master limited partnership's (MLP) high dividend yield.

Dirt cheap any way you slice it

Enterprise Products Partners has generated $9.1 billion of adjusted EBITDA over the past 12 months. With its enterprise value currently around $88.2 billion, the MLP trades at less than 10 times its earnings. The MLP is also really cheap on a cash flow basis:

A slide showing Enterprise Products Partners' yields and uses of its cash flow.

Image source: Enterprise Products Partners.

That low valuation is a big driver of the MLP's high distribution yield (currently 7.4% compared to 1.5% for the S&P 500). While Enterprise Products Partners has a sizable payout ratio (53% of its adjusted cash flow from operations and 80% of its adjusted free cash flow), it retains more than enough money to cover capital projects and buy back some of its dirt cheap units. Those drivers help grow its cash flow. That should give it the fuel to increase value for investors over the long term. 

The fuel to grow

Enterprise Products Partners trades as if it's not growing, which isn't the case. The company has expanded its adjusted EBITDA at an 8.4% compound annual rate since 2017. Meanwhile, adjusted free cash flow per unit has surged more than 245% over the timeframe.

There's lots more growth ahead. Enterprise Products Partners recently completed $2.5 billion of expansion projects and expects to finish $3.8 billion by year-end. These projects will supply it with incremental earnings and cash flow in the coming quarters. It has $4.1 billion of growth projects currently under construction (including those it will finish this year), providing some visibility into its growth over the next few years. It also has several more expansion projects under development. While most of its projects currently support fossil fuels, it's evaluating lower carbon energy opportunities, which could be a major long-term growth driver.

The MLP also has a long history of completing value-enhancing acquisitions. Last year, it spent $3.2 billion to acquire Navitas Midstream and another $160 million to purchase some pipelines and related assets. These investments provided it with incremental cash flow and growth projects. 

Enterprise Products Partners has ample financial flexibility to continue investing in its growth. In addition to retained cash flow, the MLP has an elite balance sheet. It has the highest credit rating in the midstream sector and a very low leverage ratio of 3.0. That gives it the capacity to continue making accretive acquisitions as opportunities arise.

Enterprise Products Partners' dual growth drivers should give it the fuel to continue increasing its distribution. The company has boosted its payout by 5.3% over the past year. It recently reached 25 consecutive years of distribution growth. It's one of only a handful of companies in the energy sector with a quarter century of dividend growth. That's a testament to its conservative business model, which has allowed it to thrive despite the industry's volatility. 

Growth and value at a ridiculously cheap price

Enterprise Products Partners is a bargain, especially given its steady growth. That's why it offers such an attractive income yield. Those factors make it look like a great investment opportunity for income seekers these days.