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Enterprise Products Partners L.P. Message Board

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  • businessguru75 businessguru75 Jan 21, 2013 11:59 AM Flag

    EPD 4 year gains

    They could bump it by more than a penny but then there would not be quarterly raises and they might have to issue more debt/units to satisfy yield only investors. I'm fine with the plan as it has produced the results that Chart points out above. I would caution people that most MLP"s have historically traded at a distribution yield of 250-275 basis points to the 10-year treasury. Obviously we are approaching that as the 10-year rises and the unit price rises. Point being, another 143% gain is unlikely in the next 4 years ;), but an annual combined return of 10-20% isn't bad either. Hopefully the momentum of the distribution increases can keep pace with rising interest rates which aren't going to go parabolic in the short term but should start rising in the next 6-12 months. Good luck to all.

    Sentiment: Hold

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    • fact of the matter is that EPD has more than enough DCF to bump the rate of distribution increase.

      I am happy with the recent .0025 larger increase per Q along with the 1X .005 they gave us in Q3 which was way over due

      But that doesn't change the fact that EPD will post approximately $1 Billion in retained DCF for 2012

      That .0025 increase per Q distributed all of $2 million extra per Q to unit holders... which means that over the course of a year, $20 million more is distributed.... remember thats out of $1 Billion retained..... a whoppin 2 %.... which leaves the big boys 98% of that cash to reinvest in operations

      Of interest are Arbs comments on the ETP bd relative to distributions...
      "Richard - You obviously need to go to the National Associartion of Puiblically Traded Partenerships Organization web site and read MLP101 primer. Since MLPs pay out all of their free cash flow and pay no (or few) taxes, the usual metrics of P/E ratios and all of the other accounting metrics have little or no meaning"

      EPD comes no where near paying out "all of their free cash flow"... and I have never said that they should.... I just believe that they should be paying more to the unit holders.... another .00125 bump would propel EPD higher (thats $1mil a Q and another $10 mil a year but just another 1% of the retained cash)

      Which would result in less units issued the next time they do a secondary.... which obviously results in lower total distribution costs over time....

      I'm in the camp that says long time unit holders should be rewarded with the perk of greater distributions... increased equity... and fewer units outstanding over the long haul

      EPD unit value is constrained by its yield... the only way to see increased unit appreciation at this time is by an increase in the rate of distribution growth

      and thank you all in advance, for the thumbs down

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