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Enterprise Products Partners L.P. Message Board

  • strum_this strum_this Oct 13, 2011 8:36 AM Flag

    Thank you EPD BOD...

    for another 5% hike in the distribution. I just did a little math on the first lot of EPD I purchased 3.5 years ago:

    I've enjoyed a 21% raise in the quarterly distribution on those units.
    The current distribution yield computed against my basis on those units is 8.25%
    I'm also sitting on a 40% capital gain.

    The folks at epplp.com are brilliant capitalists.

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    • I'm starting to become disappointed in the rate of the distribution increases...

      EPD has raised the distribution every Q by 3/4 of a cent every Q for years now and do not disagree that this is a good thing...

      However with the increase always being 3/4 of a cent and EPD retaining massive amounts of DCF... the rate at which the distribution grows has slowed considerably..

      EPD should be giving serious consideration to increasing the distribution by 1 cent a Q or risk the appearance of slower growth... which eventually will put a damper on share price appreciation

      • 2 Replies to Mktplyr517
      • What you say is true. But remember - during the time that the 3/4 cent raises were a bigger piece of each unit's pie, they were also doing regular secondary offerings to fund growth. The recent strategy appears to be fund growth with higher DCF retention, filling the gaps with debt (easily retired) instead of equity (more risky to retire). Not necessarily a bad tradeoff as it seems to me like a more sustainable method to grow.

      • I was just looking at some of EPDs #s for last Q... DCF was 1.6 xs the distribution... that means they are holding on to 37.5% of distributable cash

        They have retained close to $500 million in DCF for the 6 months of 2011 so far..

        Yet to increase the distribution by another $.0025 to 1 full cent that would result in just $2 million more being distributed to unit holders

        EPD is being rather cheap with us limited partners... they may be forgetting that it is our money..... and I don't see how retaining that kind of cash is in anyone's interests

        One could easily argue that if the distribution was growing at a faster clip... share price would be higher... which would mean less dilution when they do the next secondary to finance expansion

        There is really no excuse for them to keep pumping it by just $.0075... the time has come to grow the increases by at least $.01... (mathematically DCF would still be at 1.6 Xs DCF)

        And while I'm not gonna do the math there is no reason that DCF shouldn't be distributed at a rate that would bring it down to 1.25 Xs DCF which would probably pump the share price by 25-30% to keep the distribution yield rate at 5.7% or so

    • Yes indeed, it's a well run company doing an outstanding job of managing and growing the company while also looking after unit holders very nicely.

 
EPD
41.10+0.55(+1.36%)Sep 19 4:06 PMEDT

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