What To Know Before Buying Enterprise Products Partners LP. (NYSE:EPD) For Its Dividend

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Enterprise Products Partners LP. (NYSE:EPD) has returned to shareholders over the past 10 years, an average dividend yield of 6.00% annually. Let’s dig deeper into whether Enterprise Products Partners should have a place in your portfolio. See our latest analysis for Enterprise Products Partners

5 checks you should do on a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is it paying an annual yield above 75% of dividend payers?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has it increased its dividend per share amount over the past?

• Is it able to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

NYSE:EPD Historical Dividend Yield Apr 12th 18

How does Enterprise Products Partners fare?

The company currently pays out 129.66% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. Going forward, analysts expect EPD’s payout to reduce to 105.06% of its earnings, which leads to a dividend yield of 7.03%. However, EPS should increase to $1.52, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. EPD has increased its DPS from $1 to $1.7 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes EPD a true dividend rockstar. Compared to its peers, Enterprise Products Partners generates a yield of 6.59%, which is high for Oil and Gas stocks.

Next Steps:

Taking into account the dividend metrics, Enterprise Products Partners ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three key aspects you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for EPD’s future growth? Take a look at our free research report of analyst consensus for EPD’s outlook.

2. Valuation: What is EPD worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether EPD is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.