This “Boring” Pipeline Stock Has Never Cut Its Dividend. Here’s the 1 Number I’d Watch.

Enterprise Products Partners (EPD -0.08%) has raised its quarterly distributions for 29 consecutive years, never once reducing its payout. Despite midstream energy’s steadiness relative to other segments of the energy sector, a track record of zero dividend cuts or suspensions is quite rare among pipeline stocks. Other large pipeline master limited partnerships (MLPs), including Plains All American Pipeline and Energy Transfer, have had to cut their distributions in the past.

A key reason for Enterprise’s strong record is its approach to cash flow distribution. By taking a more cautious approach, this MLP’s unitholders could continue to benefit from its payout consistency.

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Enterprise Products Partners and its well-covered dividend

In its quarterly earnings releases, Enterprise Products provides numerous financial metrics. One to pay particular attention to is the coverage of distributions ratio, which is distributable cash flow divided by distributions. Last quarter, this figure came in at 1.9x.

In other words, the MLP generated distributable cash flow nearly twice the size of distributions. With this high coverage, Enterprise is able to, on one hand, maintain and grow its nearly 5.75% dividend. At the same time, there’s plenty of cash flow on hand to fund growth and expansion, reducing Enterprise Products Partners’ need to borrow or issue additional MLP units.

Enterprise Products Partners

Today’s Change

(-0.08%) $-0.03

Current Price

$39.02

Key Data Points

Market Cap

$84BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day’s Range

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$38.85 – $39.20

52wk Range

$30.01 – $40.16

Volume

1M

Avg Vol

3M

Gross Margin

12.98%

Dividend Yield

5.65%