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Enterprise Products Hikes Payout, Wins Transportation Deals

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Midstream energy service provider Enterprise Products Partners LPEPD has received approval to hike its quarterly cash distribution from the board of directors of its general partner.

The new distribution of 42 cents per unit − $1.68 per unit on an annualized basis − has marked an increase of 1.2% from the prior quarter distribution of 41.5 cents and 5% increment from 40 cents in the year-ago quarter.

It is to be noted that the increased distribution is expected to be paid on Aug 7, 2017, to unitholders of record as of Jul 31, 2017. Based on the closing price of $26.90 per unit on Jul 6, 2017, the stock has a dividend yield of 6.2%. Investors should know that the news marks the hike of its cash distributions for 52 successive quarters, reflecting stable fee-based cash flow from diversified midstream assets.

In a separate announcement, Enterprise Products said that it has clinched a number of long-term transportation contracts for its oil pipeline system from Midland to ECHO. These extra contracts will likely boost volumes from the Midland to Sealy part of the pipeline system to 335,000 barrels a day. By the fourth quarter of this year, the Midland to Sealy pipeline will probably start with limited commercial operations. By the second quarter of 2018, the pipeline is anticipated to begin full service with capacity to transport 450,000 barrels of oil per day.

Based in Houston, TX, Enterprise Products has an extensive pipeline network that spreads across almost 50,000 miles. The pipelines carry natural gas, NGL, crude oil and refined products. Notably, the partnership's midstream properties are linked to all prospective shale plays that are rich in natural gas and oil in the U.S. These extensive natural gas pipelines provide it with stable fee-based revenues.

However, since 2012, long-term debt at Enterprise Products has been on the rise at an exponential rate. Also, the stock, belonging to the Zacks categorized Oil/Gas Production Pipeline Mlp industry, lost more than 7% over the last one year.

Zacks Rank & Stocks to Consider

Enterprise Products currently carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, better-ranked players in the energy sector are Canadian Natural Resources Limited CNQ , Pembina Pipeline Corporation PBA and W&T Offshore Inc. WTI . Canadian Natural and Pembina Pipeline sport a Zacks Rank #1 (Strong Buy), while W&T Offshore carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

We expect year-over-year earnings growth of almost 725% at Canadian Natural in 2017.

Pembina Pipeline's 2017 earnings are likely to grow over 87% year over year.

W&T Offshore had an average positive earnings surprise of 69.21% for the last four quarters.

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Enterprise Products Partners L.P. (EPD): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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