This 6.7% Dividend Stock Looks Absurdly Good Today

I first initiated a position in Enterprise Products Partners (EPD 0.28%) more than two years ago. How has that investment fared so far? Not bad. The midstream energy company has generated a total return of roughly 45%.

Granted, that performance lags behind the S&P 500‘s total return of 56% during the same period. However, one thing I could count on, rain or shine, with Enterprise Products Partners was (and is) its juicy distribution.

How does the stock look today? Absurdly good, in my opinion.

An income investor’s dream stock

First of all, Enterprise Products Partners is an income investor’s dream stock. It currently offers a forward distribution yield of 6.7%. The master limited partnership (MLP) doesn’t have to produce much in the way of unit price appreciation to deliver a solid total return.

What’s more, Enterprise boasts an outstanding track record of distribution hikes. The company has increased its distribution for 26 consecutive years. It has also paid $1.2 billion in “invisible” distributions since its initial public offering in 1998 via unit buybacks.

Building this impressive record wasn’t easy. Enterprise Products Partners faced multiple big challenges through the years, including the financial crisis of 2007 through 2009, the oil price collapse of 2015 through 2017, and the COVID-19 pandemic of 2020 through 2022. However, it was able to generate strong cash flow per unit to fund its distributions during every crisis.

Some rivals were forced to resort to selling assets to cover their distributions during tough periods. Not Enterprise Products Partners. It’s the only midstream energy company that has been able to grow its adjusted cash flow from operations (CFFO) per unit and reduce unit count without any material asset sales.

Today, Enterprise Products Partners operates more than 50,000 miles of pipeline. It owns 43 natural gas processing trains and 26 fractionators, which separate the components of hydrocarbons. In addition, the MLP can store over 300 million barrels of liquids and has 20 deepwater docks.

More to the story

I mentioned earlier that Enterprise Products Partners’ total return hasn’t been as high as the S&P 500’s since I bought it. If we looked back over the last five years, though, it would be a different story. Enterprise has also narrowly outperformed the S&P 500 in total return so far in 2025.

The MLP’s distribution isn’t the only reason behind its market-beating total returns. The rising demand for U.S. hydrocarbons, especially natural gas liquids (NGLs), has played a key role as well. I think these demand trends will extend well into the future.

Production of oil, NGLs, and natural gas is projected to increase steadily through the end of this decade. Artificial intelligence (AI) is an important driver behind the higher demand for natural gas. The data centers that host AI models require massive amounts of electricity, and natural gas is a good option to fuel the power plants that serve these data centers. In addition, LNG demand in Asia and Europe is expected to rise by roughly 30% by 2030.

Enterprise is well positioned to capitalize on the demand growth. The MLP has $7.6 billion in major capital projects underway, with $6 billion of these projects projected to come online this year. It is also hitting the ground to create more opportunities: Enterprise’s staff have visited over 20 international cities to boost export growth.

An attractive valuation, too

What more could investors want than an ultra-high-yield distribution and solid growth prospects? An attractive valuation. Enterprise Products Partners has that, too.

The MLP’s units trade at 11.2 times forward earnings. That’s the lowest forward earnings multiple in its peer group. It’s also well below the S&P 500 energy sector’s forward price-to-earnings ratio of 15.9. I think Enterprise Products Partners easily qualifies as an absurdly good stock to buy right now.