In a market obsessed with artificial intelligence stocks and high-flying meme names, midstream oil and gas player Enterprise Products Partners (EPD +1.19%) has not received the attention it deserves.
This oil and gas pipeline operator, which is structured as a master limited partnership (MLP), offers a distribution (dividend) yield of 6.2% and has increased its distributions for 28 consecutive years.
Enterprise Products Partners also boasts strong financials. In fiscal 2025, the MLP reported record cash flow from operations of $8.7 billion and returned roughly $5 billion in capital to shareholders. With a payout ratio of nearly 58% of adjusted cash flow from operations, the distribution is clearly funded by operating performance and not debt or accounting adjustments.
Enterprise Products Partners also expects to generate $1 billion worth of discretionary free cash flow in 2026, with 50% to 60% earmarked for unit repurchases. This buyback activity could further improve distribution per unit shares for the remaining investors.
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Resilient business backs distributions
Enterprise Products Partners earns the majority of its revenues from long-term, fee-based contracts tied to volumes rather than oil and gas prices. Management further noted that the new assets brought online during 2025 helped offset some of the negative impact from the company's commodity-sensitive businesses and narrower marketing margins.
NYSE: EPD
Key Data Points
Enterprise Products also has about $4.8 billion worth of major projects underway, including several natural gas gathering, compression, and treating projects across the Permian Basin as well as expansions at the Neches River Terminal and incremental LPG export capacity along the Gulf Coast. The company expects to invest $2.5 billion to $2.9 billion in 2026 and $2 billion to $2.5 billion in 2027 on additional growth projects. The capital program provides clear visibility into future cash flow growth in the coming years.
Management has also highlighted that liquified petroleum gas exports are already contracted through 2030. As terminals expand and utilization rises, the company plans to export 1.5 million barrels per day of natural gas liquids by 2026. This would position exports as another incremental growth driver.
In this environment, this MLP seems a smart income-focused pick in 2026.
