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Enterprise Products Partners L.P. (EPD) is a fully integrated midstream energy company with 50,000 miles of crude oil, natural gas, and other energy pipelines, 260 MMbls of storage capacity, numerous processing facilities, and nearly 20 deep water docks.
The company generated about half of its gross operating margin from natural gas liquids (NGLs), a quarter from crude oil, and the remainder from natural gas, petrochemicals, and other sources in 2020. With long-term contracts, the company’s income has been insulated against the recent swings in energy prices stemming from the COVID-19 pandemic.
Looking ahead, the company forecasted a $1.6 billion increase in 2021 growth capital and an $800 million increase in 2022 growth capital based on sanctioned projects, according to its latest investor presentation, compared to $2.9 billion in growth capital last year.
EPD has increased its distribution for more than 21 consecutive years at a 6% compound annual growth rate. At the same time, it maintains one of the highest credit ratings among midstream operators with a BBB+/Baa1 rating and only 3.5x leverage that’s backed by $6 billion in available credit capacity and unrestricted cash.
The company raised its quarterly dividend by 1.1% to $0.45 per unit, which represents nearly 8% forward yield, after holding it even last quarter. The current dividend is payable on February 11, 2021 to shareholders on record as of January 29, 2021.
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