Many investors came off the sidelines last week after the announcement of a relaxation in trade tensions between the U.S. and China. I was one of them. However, my decision to put some of my money to work had nothing to do with the Trump administration's tariffs.
I added to my existing position in Enterprise Products Partners (EPD -0.09%), one of the top midstream energy companies in North America. What's more, I plan to buy even more of this 6.6%-yielding dividend stock.
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The easy answer
Why am I buying and intend to continue buying Enterprise Products Partners? I've already hinted at the easy answer: the company's juicy distribution.
I don't rely on income from my investments yet. However, my goal is to begin transitioning into semi-retirement in a few years. Stocks like Enterprise Products Partners fit well with my long-term investing plans. In the meantime, a 6.6% forward distribution yield provides a great foundation for exceptional total returns.
Sometimes, such a high yield can be a yellow flag about potential underlying problems. That's not the case at all with Enterprise Products Partners, though. The limited partnership (LP) has increased its distribution for 26 consecutive years.
Enterprise is in solid shape to extend that streak. The LP paid $1.16 billion in distributions to unitholders in the first quarter of 2025. It generated distributable cash flow of $2 billion, up 5% year over year. The midstream energy company's adjusted cash flow from operations payout ratio is 56%, a level that gives Enterprise plenty of flexibility to grow the distribution.
A less obvious reason
There's also a less obvious reason why I'm increasing my stake in Enterprise Products Partners. Some might view any business related to fossil fuels as a lost cause. But Enterprise is poised for solid growth.
The demand for liquid natural gas (LNG) in Asia and Europe is projected to increase by around 30% by 2030. Much of that LNG will come from the U.S. because of the low costs. And Enterprise will transport a lot of it with the company's more than 50,000 miles of pipelines.
Meanwhile, artificial intelligence (AI) should provide a strong tailwind in the U.S. The data centers that host AI systems are electricity hogs. Importantly, they also must have steady and dependable power. Natural gas is an ideal fuel for power plants supporting these data centers.
Admittedly, Enterprise Products Partners isn't likely to deliver jaw-dropping growth. But with its ultra-high yield, it doesn't have to do so to still generate attractive total returns.
My other favorite thing about Enterprise Products Partners
What else do I really like about Enterprise Products Partners? Its stable business model.
I don't think we're out of the woods yet with regards to resurging inflation. The brunt of the tariffs that remain in effect still hasn't been fully felt by Americans. But even if inflation roars back, Enterprise shouldn't be affected very much. Around 90% of its long-term contracts have price escalation provisions built in.
What if the U.S. slips into a recession? Again, Enterprise should be in pretty good shape. I suspect the demand for the NGLs that make up 87% of the LP's gross operating margin will hold up relatively well even during an economic decline.
History supports my optimism, by the way. Look back at the financial crisis that caused the Great Recession of 2007 through 2009. Enterprise's cash flow per unit held up well. It was a similar story during the oil price collapse that began in 2015 and lasted until 2017. Ditto for the COVID-19 pandemic. The company has also delivered double-digit returns on invested capital every year since 2005.
I'm glad I recently bought more units of this well-run midstream leader. I suspect I'll be even happier with my decision a few years from now.
