Enterprise Products Partners (NYSE: EPD) has been a phenomenal dividend stock throughout its two-decade history. The master limited partnership (MLP) increased its payout not only in each of those 20 years but also for the past 59 consecutive quarters. All those raises have helped keep the midstream company's payout at a well-above-average level, and it currently yields 6%.
That trend should continue in the next few years. Driving that view are the more than $5 billion of expansion projects the MLP has under construction, most of which will enter service by the end of 2020. The company recently added several new projects to that growth pipeline, giving it even more fuel to drive distribution growth.
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Topping off the tank
Enterprise Products Partners recently approved three expansion projects at its Houston Ship Channel Terminal. First, the company is increasing its capacity to load liquefied petroleum gas (LPG). The MLP can currently load 600,000 barrels per day (BPD) of LPG on to ships, which export it to global markets. The company is already in the process of increasing its capacity by 175,000 BPD thanks to strong supply growth from U.S. shale plays as well as healthy export demand. That expanded capacity should be available during the third quarter. However, the company is now increasing the facility's size by another 260,000 BPD thanks to continued healthy market conditions. This next phase should be on line by the third quarter of next year.
The midstream company is also increasing its capacity to export polymer-grade propylene (PGP), a petrochemical product used in making plastics. Enterprise Products Partners is adding refrigeration facilities to its terminal so that it can load up to an incremental 67,200 BPD of PGP on to ships, including co-loading it on those also carrying LPG. The company expects this project to come on line in the fourth quarter of next year.
Finally, Enterprise Products Partners is building an eighth dock at the terminal that will have the capacity to load 840,000 BPD of crude oil. That project should also be in service by the fourth quarter of 2020 and will increase its oil export capacity at this facility up to 2.75 million BPD.
Given the late-2020 completion time frame for these projects, they'll supply the company with incremental income that should enable it to continue increasing its payout through at least 2021.
Image source: Getty Images.
There's plenty more where those came from
These projects, just the latest in a string of export-related facilities Enterprise and others are building in Texas, are helping transform the U.S. into an export superpower. However, the industry's export-related building boom isn't likely to slow down anytime soon given the growth of the Permian Basin. According to Enterprise Products Partners' estimates, the U.S. will increase its oil shipments from 3 million BPD this year up to 8 million BPD by 2025. Meanwhile, LPG exports will double over that time, rising from 1.4 million BPD to 2.8 million BPD.
Enterprise Products Partners already has several other export-related projects in development. The company, for example, has proposed building the Sea Port Oil Terminal (SPOT), an offshore oil export terminal about 40 miles from the coast of Freeport, Texas. SPOT would be able to fully load supertankers capable of carrying 2 million barrels of oil. The company is also looking to capture additional opportunities to expand its LPG capacity and its ability to export other products such as gasoline, diesel, ethane, and petrochemicals.
Overall, the company is exploring the potential to invest another $5 billion to $10 billion in a range of opportunities. In addition to its export-related projects, the MLP has several other midstream infrastructure expansions in development. These opportunities include building additional natural gas and natural gas liquids (NGLs) processing plants; expanding its oil, natural gas, and NGL pipeline capacity; and constructing new petrochemical complexes. If Enterprise Products can secure some of these projects, they could enable the company to continue increasing its payout well into the next decade.
Three more reasons to buy this excellent dividend growth stock
Enterprise Products Partners has richly rewarded income investors over the years by continually increasing its above-average payout. That trend should continue for the next several years after the company added three more expansion projects to its already-loaded growth pipeline. Meanwhile, with many more opportunities in development -- and a strong financial profile to fund future expansions -- this MLP appears poised to continue increasing its payout for years to come. That growing income stream makes it a top-tier option for income seekers.
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