Enterprise Products Partners' (EPD +1.43%) well-above-market 6% yield is likely to be the biggest draw for investors. To put that yield into perspective, the S&P 500 index (^GSPC +0.73%) yields around 1%, and the average energy stock yields 2.2%. However, there is a lot more to like about this North American midstream giant as it steadily approaches a 30-year streak of annual distribution increases. Here's why it's likely to hit that mark in 2028.
Enterprise is most of the way there
The most obvious reason why Enterprise is likely to hit 30 annual distribution increases by the end of 2028 is that it is already at 28 years as 2026 comes to a close. However, the really interesting thing here is that the current 28-year streak is basically as long as Enterprise has been publicly traded. So, the master limited partnership (MLP) has a very clear focus on returning value to unitholders via regular distribution growth.
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To be fair, the distribution doesn't grow quickly. Think low to mid single digits. However, with a 6% starting yield, that probably won't bother most yield-focused investors. Still, this is just the start of the story; the real reason Enterprise is likely to hit 30 years is the strength of its business.
Enterprise has a rock-solid business built on a toll-taker model
Enterprise operates in the energy industry, a sector known for its volatility. However, Enterprise sidesteps the commodity risk that leads to most of the industry's volatility. It is a toll-taker, charging customers fees for the use of its energy infrastructure assets. It operates a large North American portfolio of pipelines, storage, and energy transportation assets.
Essentially, it helps move oil and natural gas around the world. Demand for energy is more important than commodity prices. Since energy is vital for the modern world, the volumes moving through Enterprise's vast midstream system tend to be high most of the time. And, with recent geopolitical conflicts highlighting the importance of energy security, demand for U.S. energy is likely to benefit from demand tailwinds. To put a number on its growth plans, Enterprise has $6.5 billion in capital investment projects underway, with projects coming online through 2029.
NYSE: EPD
Key Data Points
The cash flows from new midstream assets will help fuel distribution growth, as will regular price increases on existing assets. But that's not the only factor to consider. Enterprise's lofty yield is also well covered by distributable cash flow. In 2025, the distribution was covered 1.7x. That leaves ample room for adversity before a distribution cut would be in the cards. Moreover, Enterprise has an investment-grade-rated balance sheet, so it could add debt in the short term to maintain its streak if needed.
And then there's another notable detail: insiders control roughly a third of Enterprise's units. Basically, insiders have a vested interest in seeing the distribution continue its slow and steady growth. And, just as important, it is unlikely that this conservatively managed midstream giant will do anything that would put its distribution at risk.
Enterprise isn't exciting, but that's the point
At the end of the day, it is highly likely that this well-run midstream business will continue to generate reliable, growing cash flows to support its distribution and distribution growth. Oil prices may rise and fall along the way, but boring Enterprise will continue to move slowly forward, rewarding investors well with its lofty yield and, if my prediction is correct, hit 30 annual distribution increases within the next two years or so. If you are trying to live off the income your portfolio generates, this is a business you should get to know very well.
