The U.S. inflation rate continues to ease. However, rising interest rates and economic uncertainty keep stocks volatile. Meanwhile, investors can earn a reliable and fat yield from Enterprise Products Partners (NYSE:EPD). Impressively, this energy infrastructure company that provides transportation and storage of oil, natural gas liquids, and natural gas recently increased its dividend, marking 25 consecutive years of uninterrupted dividend hikes.
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EPD increased its quarterly dividend to $0.50 per share from $0.49, translating into a compelling yield of 7.56% (forward yield). The increased dividend will be paid on August 14, 2023, to shareholders of record as of July 31.
EPD: A Dependable Passive Income Stock
Enterprise Products Partners’ solid dividend payout history, high yield, and strong financials make it a dependable passive income stock. Thanks to its geographically diversified and high-quality assets and steady demand, EPD’s adjusted EBITDA has grown at a CAGR of 9% since 2017. During the same period, EPD’s free cash flow per share grew at a CAGR of 25.2%.
Looking ahead, its multi-billion-dollar capital projects are under construction and will come into service over the next two years, driving its earnings and cash flows. In addition, long-term contracts and continued investments in midstream energy infrastructure augur well for growth.
The company is also focusing on lowering its leverage profile. Also, 96.9% of its debt is at a fixed rate, making it less suspectible to the rising interest rate environment. Overall, EPD’s ability to grow its earnings and cash flows makes it a solid income stock.
Is EPD Stock a Good Buy Now?
Wall Street analysts are bullish about the company’s prospects. EPD stock has a Strong Buy consensus rating on TipRanks based on six Buy and one Sell recommendations. At the same time, these analysts’ 12-month average price target of $32.86 implies 24.28% upside potential from current levels.
