Leader in dividend stocks Enterprise Product Partners (EPD) is back after management increased the payout again, bringing the quarterly dividend to 49 cents per share. That brings the annualized return to 7.36%, well above the S&P 500 average of 1.5%.
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The IBD Income Investor has highlighted many oil and gas pipeline stocks over the past year. Stable cash flow and a buoyant energy sector have led to impressive results and appetizing dividend yields.
Houston-based Enterprise Products operates more than 50,000 miles of crude oil and natural gas pipelines. It also maintains natural gas storage facilities and processing sites.
Dividend stocks increase payout for 75th time
Corporate product investors expect steady increases in dividends, so the latest rise comes as no surprise. In fact, this dividend stock has increased distributions every year since the company was founded 25 years ago.
Most high-yield companies increase payouts just enough to maintain their dividend aristocrat status. But Enterprise Products is aggressively increasing distributions several times a year, with a staggering 75 increases over the past quarter century.
Enterprise Products also saw solid growth, supporting these aggressive payouts.
Fourth-quarter earnings on Feb. 1 showed continued strength, with earnings of 65 cents per share beating analysts’ estimates by 2 cents. Earnings from these dividend-paying stocks fell short at $13.65 billion, which still marked an impressive 20.1% year-over-year growth.
Total net income of $5.5 billion for fiscal 2022 compares favorably to $4.6 billion in 2021, while earnings of $2.54 per share marked a slight increase from 2, $20. Slow but steady growth is expected to continue, with EPS expected to reach $2.56 and $2.64 in 2023 and 2024.
Enterprise Products kicked off 2023 by refinancing some of its debt by issuing $1.75 billion of 3- and 10-year notes. The company’s debt remains investment grade, with a BBB+ rating from S&P Global.
Enterprise Products shares formed a 26-week consolidation basis with a buy point of 27.46. EPD stock held support at its 200-day line last month and is trading firmly above its 50-day moving average.
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