This Energy Dividend Stock Will Hold Up No Matter the Market Conditions
Enterprise Products Partners (NYSE: EPD) is not your typical oil and natural gas stock. In fact, its business, moving oil and natural gas, tends to hold up well regardless of whether or not oil prices are high or low. Right now, while investors are bidding up the shares of oil and gas producers because of a commodity rally, you might want to step back and consider the merits of Enterprise's hefty 6.7% yield and slightly more boring business model.
The energy industry is highly cyclical, with oil and natural gas prices often moving higher and lower in dramatic fashion. However, the midstream niche, which is Enterprise's focus, operates a little differently. Essentially, companies like Enterprise charge fees to energy companies as they move oil and natural gas through its systems of pipes, storage, processing, and transportation assets. Enterprise, with a $60 billion market cap, happens to be one of the largest and most diversified midstream players in North America.
That core is good, but the real number that should interest investors is the first-quarter 2022 distribution coverage ratio of 1.8 times. The partnership's distributable cash flows were way above what was needed to pay the distribution, affording investors a great deal of income security even if Enterprise faces some adversity.
Source Fool.com
