4 Reasons This Value Stock's 7.2% Dividend Yield Is for Real

Income-focused investors have to guard against the emotional risk of buying ultra-high yields that are supported by risky companies. It is very easy to get so caught up in the Income stream from the dividend that you overlook the investment risk you are taking on. That's not a problem with Enterprise Products Partners (NYSE: EPD) and its huge 7.2% distribution yield. Here's four reasons why Enterprise's giant yield is for real.

As a foundation, it's important to understand that Enterprise operates in the highly volatile energy sector. That sounds risky, but the master limited partnership (MLP) is a midstream player, which means that it helps to move oil and natural gas around the world via a portfolio of vital energy infrastructure. It charges fees for the use of the physical assets it owns, which creates a reliable stream of cash flows. Demand for energy, which is usually strong even when oil prices are weak, is the more important factor in Enterprise's performance.

Image source: Getty Images.

Continue reading


Source Fool.com