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Is The Dividend Of Enterprise Products Partners Safe?

Published Fri, 14 Sep 2018 12:03:12 -0400 on Seeking Alpha

Enterprise Products Partners (EPD) is an MLP that currently offers an attractive 6.0% dividend yield. While the MLP continues to grow its dividend quarter after quarter, its dividend payout ratio has remained above 100% in the last four years while its dividend growth rate has slowed to a mild 0.6% per quarter in the last four quarters. Therefore, as the vast majority of its shareholders are holding the stock for its dividend, the big question is whether this dividend is safe.
Business overview Enterprise Products is one of the largest MLPs and a leading North American owner and operator of pipelines and storage facilities of natural gas, natural gas liquids (NGLs), oil, refined products and petrochemicals. It also has 28 natural gas processing plants and export facilities.
Business performance and growth prospects Due to the downturn in the natural gas market and the oil market, which both began in 2014, the results of the MLP came under pressure in recent years. Consequently, its earnings per share have remained well below the dividend in the last four years. As several MLPs cut their dividends due to the downturn in these two markets, the shareholders of Enterprise Products should certainly check the sustainability of its generous dividend.
Although Enterprise Products felt the impact of the downturn in the natural gas and oil markets, its performance was quite resilient. More precisely, while other MLPs saw their earnings collapse, Enterprise Products incurred just an... Read more