I like EPD:NYSE, here’s why.
Morningstar had this to say about Enterprise Products Partners LP
EPD’s secret sauce is in its ability to aggregate supply from multiple sources and deliver it to multiple end-user markets, whether that involves export markets or the petrochemical industry.
EPD’s top cash flows
1. NGL transportation and services
2. crude oil pipelines
3. petrochemical facilities
Some major projects adding to cash flow diversity: (Source)
1. the Seaway reversal
2. the PDH unit,
3. ethane export facility.
EPD is in position to benefit any NGL growth, domestic or international.
Analyst Peggy Connerty notes:
EPD operates within a niche segment of the energy
midstream value chain and has a natural economic moat
surrounding its operations
Here are some snippets of Peggy’s analysis of EPD
… The location of EPD’s energy infrastructure, including its proximity to refining centers along the Gulf Coast and pipeline connections to every ethylene steam cracker in the country.
…Extensive regulatory oversight of Enterprise’s assets acts as gateway for new entrants with many federal, state and local agencies involved in permitting, siting, pipeline rate setting/increasing, pipeline new build and abandonment
and power of eminent domain.
…Near monopoly status for many of its pipelines coupled with a fully integrated system, which connects multiple sources of supply with multiple end user markets…
Dividend Yield 6.45%
I consider this pullback on this stock as a buying opportunity even though the energy market is suffering losses and will likely continue to suffer losses for the foreseeable future. However in the long run, if I’m still alive, EPD is well positioned with integrated assets and geographic diversification.
Some estimates put real value at around $32, however that has been recently lowered from $36.
I am adding more shares if price hits $23.75, current price is $24.19 (Friday market close). I will monitor this buy and make price changes based on short term market data and stock movement. I hope to capture more stock below $24 before the stock goes Ex-Date. Last Ex-Date was Jan 27, 2016 so the next ex date will be around April 27th.
Full disclosure: Bought Shares on 10/6/2008, stock is up 111.36% the dividend has been re-invested. This will be my second limit buy of EPD.
There is significant risk with this stock. Interest rates could go up, current legislation changes could affect EPD and all MLPs by making it more difficult to attract investors, raise capital and execute growth strategies. Plus there are weather risks such as hurricanes, spills, fires, and of course the ever loving explosions.
These are my ideas, always consider the source and make your own judgement.