Should You Buy Enterprise Products Partners While It's Below $41?
Key Takeaways
Enterprise ducts Partners (EPD 0. 26%) is a high-yield mid master limited partnership (MLP). It is one of the largest mid players in North America and has been a conservatively...
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July 1, 2025
01:23 PM
The Motley Fool
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Enterprise ducts Partners (EPD 0. 26%) is a high-yield mid master limited partnership (MLP)
It is one of the largest mid players in North America and has been a conservatively run and reliable income investment for decades
But the MLP's unit price is marching steadily back toward the all-time high reached in 2014
Is it worth buying at such a lofty level
What does Enterprise ducts Partners do
As noted, Enterprise is one of the largest mid es in North America
The mid segment of the energy sector basically connects the up to the down and the rest of the world
The up is where energy is duced
The down is where it is cessed into chemicals and refined ducts
The mid is, effectively, the pipeline between the two and the is built on a toll-taker model
Image source: Getty Images
While commodity prices heavily impact up and down es, demand is the key factor for mid es
Since energy is so important to modern life, demand for the services Enterprise vides tends to be robust regardless of oil prices
The reliable cash flows here support the MLP's distribution, which has been increased annually for 26 consecutive years
Now throw in the fact that Enterprise has an investment-grade-rated balance sheet
And the fact that its distributable cash flow covers its distribution by 1
Basically, there's a lot of leeway before a distribution cut would be on the table
This is an attractive income investment, particularly for more conservative investors
Should you buy Enterprise as it rises toward its all-time high
While Enterprise's fundamentals make it attractive, what the price
The high-water mark for the MLP's units came in late 2014, at around $41 per unit
That was a point when Wall Street was particularly enamored of the mid sector
But, as is normal, mercurial investors lost interest in the sector during an energy downturn and Enterprise's unit price cratered
The units have been heading steadily higher of late and are at around $31 per unit
But there's a big difference between late 2014 and today thanks to the reliable distribution growth that has occurred over the years
In 2014 Enterprise's yield was just 3. 4% when it hit that all-time unit price high
EPD data by YCharts Even if the unit price were to rise to $41, the yield would still be an attractive 5
And that assumes there's no further distribution growth, which seems highly unly
In fact, the reliable distribution growth is really what's helping to power the units higher
More increases are bable and will bably lead to more price gains
In other words, expect Enterprise to reach that $41 high-water mark again at some point, perhaps soon
The buy decision is relative with Enterprise Very often when a stock is closing in on all-time highs it is a sign that the price tag is getting a little too steep
But everything is relative, and that's very important to keep in mind with Enterprise
Given its distribution growth, the valuation it was afforded in 2014 isn't the same as the valuation the same price will lead to in 2025
The appears to, legitimately, be worth more now
And the yield, even if the price were $41 per unit, would still make Enterprise more attractive today than it was back in 2014
Reuben Gregg Brewer has no position in any of the stocks mentioned
The Motley Fool recommends Enterprise ducts Partners
The Motley Fool has a disclosure policy.
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