Latest news with #midstream
Yahoo
11 hours ago
- Business
- Yahoo
1 High-Yield Midstream Stock to Buy With $10,000 and Hold Forever
Investors looking for high yields have plenty of options in the midstream sector. It isn't a good idea to focus only on yield when looking at midstream stocks. The business that backs the yield is often more important than the yield. 10 stocks we like better than Enterprise Products Partners › Investors looking for high yields would be remiss if they didn't dig into the midstream energy sector. But don't just buy any midstream business, because there are risky high-yield investments here, and some businesses have less-than-impressive histories. Here are some examples of businesses to be leery of, and one high-yield midstream business worth buying and holding forever. When you look at high-yield investments, you have to make sure you understand why the yields are so high. In the midstream space, yields are high across the board because the sector is largely focused on producing income for shareholders. So, generally speaking, midstream stocks usually have attractive yields. But not all high yields are created equally. For example, USA Compression Partners (NYSE: USAC) has a lofty 8.3% yield. But the business is run with more leverage than many other businesses in the sector. To put a number on that, the debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio is around 4.4x today. That's above the 3.7x of Energy Transfer (NYSE: ET), the business that is USA Compression Partners' general partner and, thus, runs it, and well above the 3.2x of Enterprise Products Partners (NYSE: EPD), one of the most conservative players in the midstream sector. What's interesting here is that Energy Transfer has a 7.3% yield, which is pretty attractive, too. But Energy Transfer cut its dividend in 2020 during the coronavirus pandemic. That was likely a time when most income investors would have preferred a little dividend consistency. Once again, there are problems with the income story that shouldn't be ignored. This brings things back to Enterprise, which has the lowest yield of the three at 6.8%. If you have $10,000 to put to work, do you want to invest in a highly leveraged business or one that cut its distribution when faced with adversity? You'll probably want to entrust your hard-earned savings to a business that has been a little more reliable. Note that Enterprise has long been conservatively operated and had an industry-leading debt-to-EBITDA ratio. Income investors are usually risk-averse, so buying Enterprise will keep you in your comfort zone on that score. But there's more to the story. Enterprise has increased its distribution every year for 26 consecutive years. That streak includes increases during the pandemic, the Great Recession, and the dot-com crash. Being a reliable income investment is clearly something Enterprise prioritizes. The distribution, meanwhile, is backed by an investment-grade-rated balance sheet. And Enterprise's distributable cash flow covers its distribution by a very strong 1.7x. There is a lot of leeway here before Enterprise would be at risk of a distribution cut. Given the $7.6 billion in capital investment projects underway, it seems far more likely that the slow and steady distribution increases will continue. Last but not least, insiders own nearly a third of Enterprise Products Partners' units. So management is fairly well aligned with unit holders, which is backed up by the business being financially conservative and providing a steady, and growing, income stream. If you are going to put your savings to work in an income investment, Enterprise is a very strong candidate, and one you can buy today and hold for the long term. To be fair, like most midstream businesses, Enterprise's yield is going to make up the lion's share of return here. But if you are an income investor, that probably won't bother you. And given all the positives, a $10,000 investment in this reliable and financially strong income producer seems like a pretty attractive long-term proposition for investors who like to buy and hold. Before you buy stock in Enterprise Products Partners, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Enterprise Products Partners wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor's total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy. 1 High-Yield Midstream Stock to Buy With $10,000 and Hold Forever was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
11 hours ago
- Business
- Yahoo
Better High-Yield Stock: Energy Transfer or Enterprise Products Partners?
Energy Transfer and Enterprise Products Partners are two top high-yield midstream stocks for investors to consider. Enterprise has a strong record and is likely the safer choice. However, Energy Transfer offers more potential upside. 10 stocks we like better than Energy Transfer › If you're an income-oriented investor, you've undoubtedly come across Energy Transfer (NYSE: ET) and Enterprise Products Partners (NYSE: EPD), two high-yielding midstream stocks. The question on many investors' minds is: Which is the better stock to own right now? I think Energy Transfer is the better stock to own, but I own both stocks, and the answer to the question is a bit more nuanced depending on your own situation. Both stocks have attractive yields, with Energy Transfer carrying around a 7.2% yield and Enterprise at 6.8%, as of this writing. However, I think Energy Transfer is the better stock to own right now because it offers more potential upside. That said, for investors who care more about downside protection than upside potential, Enterprise is probably the better option for you. Energy Transfer and Enterprise have a lot of similarities. They are both structured as master limited partnerships (MLPs) and own two of the largest midstream systems in the U.S. Both companies have tightly integrated systems that can gather, process, store, transport, and export hydrocarbons. They also have strong presences in the Permian Basin and along the Gulf Coast in Texas and Louisiana. Now, there are differences in their systems. Energy Transfer has more geographic breadth across the country, while Enterprise is more concentrated along the Gulf Coast and Texas. Energy Transfer, meanwhile, operates one of the largest natural gas pipeline systems in the country, while Enterprise is the dominant player in natural gas liquids (NGLs). Both companies lean heavily into fee-based activities, which protects their cash flows from fluctuations in energy prices and commodity spreads. However, neither is afraid to take advantage of arbitrage opportunities. They also like to structure their contracts with take-or-pay provisions, which means they get paid whether or not a customer uses their services, as well as inflation escalators. This all helps provide visibility to their cash-flow streams. Historically, Enterprise has been the much more conservative of the two companies. It likes to keep its leverage low and support its distribution with a high coverage ratio. This has helped the company increase its distribution every year for the past 26 years, including through some very tough economic and energy price periods. Admittedly, Energy Transfer has not been as good on this front. It had to slash its distribution in half during the pandemic after it got a bit over its skis with its leverage. However, the strength of its operations allowed it to quickly deleverage and restore its distribution to pre-pandemic levels within two and a half years. Today, the company's distribution is the highest it's ever been (split adjusted), and management recently said the company was in the best financial shape in its history. Both companies are also seeing strong growth project demand at the moment. After reducing its growth capital expenditure (capex) to just $1.6 billion in the wake of the pandemic, Enterprise plans to spend between $4 billion to $4.5 billion this year, up from $3.9 billion last year. The company also has $6 billion in projects slated to come online this year, which should help boost growth. Much of this is centered around the NGL value chain and the Permian. However, Energy Transfer has historically been the more aggressive company when it comes to pursuing growth projects, and it raised its growth capex budget from $3 billion last year to $5 billion this year. Much of its efforts will also be around the Permian. One of its largest projects is a pipeline that will take associated gas away from the Permian to support growing natural gas demand in Texas. It is the company's expansive natural pipeline system, meanwhile, that is helping the company see increasing interest in projects related to artificial intelligence (AI). It signed its first AI-related deal with data center developer Cloudburst to directly provide natural gas to its newest data center development in Texas. Meanwhile, it has been getting a lot of inbound interest from data center operators and power companies to provide new connections to support growing energy demand stemming from AI. Given its more robust natural gas pipeline system, Energy Transfer should have more AI-related opportunities in front of it compared to Enterprise. In addition to having more growth opportunities ahead, Energy Transfer is also the cheaper stock and carries a higher yield. From a valuation standpoint, Energy Transfer trades at a forward enterprise value (EV)-to-EBITDA multiple of just 8.2 times compared to 9.9 times for Enterprise. Both of those multiples are below historic MLP valuations, as the group had an average EV-to-EBITDA ratio of 13.7 times between 2011 to 2016. Energy Transfer also carries the slightly higher yield, and both stocks look poised to grow their distribution in the 3% to 5% range moving forward. While Enterprise has historically had the higher distribution coverage ratio, based on distributable cash flow (operating cash flow minus maintenance capex), that is no longer the case today. Last quarter, it had a coverage ratio of over 2, while Enterprise's was at 1.7. However, Enterprise's leverage does remain lower. Taken altogether, given its track record, I think Enterprise is the safer stock, but I think, given the valuation difference and more growth opportunities in front of it, Energy Transfer is the better stock to own with more upside potential. Before you buy stock in Energy Transfer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Energy Transfer wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor's total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Geoffrey Seiler has positions in Energy Transfer and Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy. Better High-Yield Stock: Energy Transfer or Enterprise Products Partners? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
11 hours ago
- Business
- Yahoo
Prediction: 3 Stocks That Will Be Worth More Than Enterprise Products Partners 5 Years From Now
Energy Transfer has a big capital project backlog, more projects in development, and is an active acquirer. Kinder Morgan's growth capital backlog has soared over the past year. Oneok has been on an acquisition binge. 10 stocks we like better than Enterprise Products Partners › Enterprise Products Partners (NYSE: EPD) has been a steady grower over the years. The master limited partnership (MLP) has built an integrated footprint of critical energy midstream infrastructure through organic expansion projects and selective acquisitions. Its methodical expansion has enabled the pipeline company to increase its distribution to investors every single year for a quarter of a century. The MLP is one of the largest players in the energy midstream sector, with a $67 billion market cap. While it's one of the most valuable companies in the space today, I predict Energy Transfer (NYSE: ET), Kinder Morgan (NYSE: KMI), and Oneok (NYSE: OKE) will eclipse its value within five years because of their better growth prospects. Energy Transfer has a current market value of around $61.5 billion. The MLP shares a lot of similarities with Enterprise Products Partners. It has a very diversified business model that includes a leading natural gas liquids export business. While Enterprise Products Partners is currently bigger than its fellow MLP, I believe Energy Transfer will zoom past it within the next five years. One catalyst is its better organic growth prospects. Energy Transfer currently expects to invest $5 billion into growth capital projects this year, which is up from $3 billion last year. It's investing in several expansion projects that should come online over the next two years, led by the $2.7 billion Hugh Brinson natural gas pipeline. The MLP also has several other expansion projects under development, including its large-scale Lake Charles LNG project. Given the timing of its current projects and its growing development pipeline, Energy Transfer's capital spending likely won't wind down anytime soon. For comparison, Enterprise Products Partners expects its capital spending level to decline from a range of $4 billion to $4.5 billion this year to a range of $2 billion to $2.5 billion next year because of a lack of major capital projects in development. On top of its robust organic growth prospects, Energy Transfer is a serial acquirer. It has made several notable deals in recent years, including WTG Midstream for $3.3 billion in 2024, Crestwood Equity Partners for $7.1 billion in 2023, and Enable Midstream Partners for $7.2 billion in 2021. Given its more robust organic growth prospects and consolidation strategy, it will likely grow bigger than Enterprise Products Partners by 2030. Kinder Morgan currently has a market cap similar to that of Energy Transfer. Like that midstream rival, the natural gas pipeline giant has robust organic growth prospects. It currently has $8.8 billion of secured expansion projects on track to enter commercial service through 2030. That's a huge uptick in its growth profile as its backlog is nearly $6 billion above its average in recent years. The gas pipeline giant sees more growth ahead. "The landscape for natural gas continues to be more and more favorable," CEO Kim Dang said in the first-quarter earnings press release. The company expects U.S. gas demand to grow another 20 billion to 28 billion cubic feet (Bcf/d) by the end of the decade, up from 110 Bcf/d last year. Kinder Morgan is pursuing over 5 Bcf/d of projects related to increased gas demand from the U.S. power sector and "a substantial amount of additional LNG feedgas opportunities," according to Dang. Add in the growth from acquisitions, Kinder Morgan recently bought a gas gathering and processing system in the Bakken for $640 million, and the company should grow much larger in the coming years. Oneok is currently the smallest of this group, with a market cap of just over $50 billion. However, it's growing rapidly. It jump-started its growth in 2023 when it acquired Magellan Midstream Partners in a transformational $18.8 billion deal. Oneok followed that up last year by acquiring Medallion Midstream and a 43% interest in EnLink Midstream for $5.9 billion in cash. It has since acquired the remaining interest in EnLink in a $4.3 billion all-stock deal. The midstream company also closed a couple of smaller bolt-on acquisitions, totaling $940 million this June and $280 million last May. The company still hasn't captured the full benefit of these deals, which should help fuel earnings growth over the next several years. On top of that, Oneok has a growing list of organic expansion projects under way. The biggest project is a $1 billion investment in a joint venture to build a new large-scale LPG export terminal and an associated pipeline with MPLX that should enter commercial service in 2028. Despite all its wheeling and dealing, Oneok has ample financial flexibility to continue expanding. It can make additional acquisitions and approve new organic expansions as opportunities arise. Its strategy of building a leading integrated energy midstream company shows no signs of slowing. Enterprise Products Partners is a slow and steady grower. While the MLP has a wave of expansion projects on track to enter commercial service over the next two years, it doesn't have any major capital projects beyond those currently on track for approval, leaving faster-growing midstream companies Energy Transfer, Kinder Morgan, and Oneok poised to pass it within the next five years. Their faster growth could enable these companies to produce higher total returns than the midstream behemoth. Before you buy stock in Enterprise Products Partners, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Enterprise Products Partners wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor's total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Matt DiLallo has positions in Energy Transfer, Enterprise Products Partners, and Kinder Morgan. The Motley Fool has positions in and recommends Kinder Morgan. The Motley Fool recommends Enterprise Products Partners and Oneok. The Motley Fool has a disclosure policy. Prediction: 3 Stocks That Will Be Worth More Than Enterprise Products Partners 5 Years From Now was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
13 hours ago
- Business
- Globe and Mail
1 High-Yield Midstream Stock to Buy With $10,000 and Hold Forever
Investors looking for high yields would be remiss if they didn't dig into the midstream energy sector. But don't just buy any midstream business, because there are risky high-yield investments here, and some businesses have less-than-impressive histories. Here are some examples of businesses to be leery of, and one high-yield midstream business worth buying and holding forever. Some troubling things to consider When you look at high-yield investments, you have to make sure you understand why the yields are so high. In the midstream space, yields are high across the board because the sector is largely focused on producing income for shareholders. So, generally speaking, midstream stocks usually have attractive yields. But not all high yields are created equally. For example, USA Compression Partners (NYSE: USAC) has a lofty 8.3% yield. But the business is run with more leverage than many other businesses in the sector. To put a number on that, the debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio is around 4.4x today. That's above the 3.7x of Energy Transfer (NYSE: ET), the business that is USA Compression Partners' general partner and, thus, runs it, and well above the 3.2x of Enterprise Products Partners (NYSE: EPD), one of the most conservative players in the midstream sector. Data by YCharts. What's interesting here is that Energy Transfer has a 7.3% yield, which is pretty attractive, too. But Energy Transfer cut its dividend in 2020 during the coronavirus pandemic. That was likely a time when most income investors would have preferred a little dividend consistency. Once again, there are problems with the income story that shouldn't be ignored. This brings things back to Enterprise, which has the lowest yield of the three at 6.8%. Enterprise has a record you can rely on If you have $10,000 to put to work, do you want to invest in a highly leveraged business or one that cut its distribution when faced with adversity? You'll probably want to entrust your hard-earned savings to a business that has been a little more reliable. Note that Enterprise has long been conservatively operated and had an industry-leading debt-to-EBITDA ratio. Income investors are usually risk-averse, so buying Enterprise will keep you in your comfort zone on that score. But there's more to the story. Enterprise has increased its distribution every year for 26 consecutive years. That streak includes increases during the pandemic, the Great Recession, and the dot-com crash. Being a reliable income investment is clearly something Enterprise prioritizes. The distribution, meanwhile, is backed by an investment-grade-rated balance sheet. And Enterprise's distributable cash flow covers its distribution by a very strong 1.7x. There is a lot of leeway here before Enterprise would be at risk of a distribution cut. Given the $7.6 billion in capital investment projects underway, it seems far more likely that the slow and steady distribution increases will continue. Last but not least, insiders own nearly a third of Enterprise Products Partners' units. So management is fairly well aligned with unit holders, which is backed up by the business being financially conservative and providing a steady, and growing, income stream. If you are going to put your savings to work in an income investment, Enterprise is a very strong candidate, and one you can buy today and hold for the long term. Enterprise checks a lot of boxes To be fair, like most midstream businesses, Enterprise's yield is going to make up the lion's share of return here. But if you are an income investor, that probably won't bother you. And given all the positives, a $10,000 investment in this reliable and financially strong income producer seems like a pretty attractive long-term proposition for investors who like to buy and hold. Should you invest $1,000 in Enterprise Products Partners right now? Before you buy stock in Enterprise Products Partners, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Enterprise Products Partners wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor 's total average return is995% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
Yahoo
18 hours ago
- Business
- Yahoo
Why Income Investors Turn to EPD When the Market Sours
Enterprise Products Partners L.P. (NYSE:EPD) is one of the best dividend stocks for a bear market. Energy plays such a critical role in the global economy that demand tends to stay strong regardless of market fluctuations. As a result, Enterprise Products Partners L.P. (NYSE:EPD) enjoys stable cash flows, which allow it to maintain and steadily grow its generous distribution. In fact, the company has raised its payout every year for 27 years straight. Aerial view of a refinery tower surrounded by the sprawling landscape of pipelines in an oil & gas midstream facility. Its healthy cash position also supports the sustainability of these dividends going forward. Enterprise Products Partners L.P. (NYSE:EPD) has around $6 billion worth of organic growth projects set to come online this year, expected to start contributing to cash flow. In the latest quarter, it generated $2.1 billion in operating cash flow and reported $1.05 billion in free cash flow. While the distribution is a major draw, it's not the only factor behind the company's strong returns. Growing global demand for US hydrocarbons, especially natural gas liquids, has also been a significant tailwind. In addition, Enterprise Products Partners L.P. (NYSE:EPD) offers an attractive dividend yield of 6.85%, as of June 17. The company currently offers a quarterly dividend of $0.535 per share. Enterprise Products Partners L.P. (NYSE:EPD) is a major midstream energy company in North America that offers a range of services, including the transportation, storage, processing, and marketing of natural gas, natural gas liquids (NGLs), crude oil, refined fuels, and petrochemicals. While we acknowledge the potential of EPD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and Disclosure. None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
