Enterprise Products Partners: This MLP Is A Beast

Sep. 5.12 | About: Enterprise Products (EPD)

Enterprise Products Partners LP (NYSE:EPD) has been an outstanding investment for any portfolio needing safe growing dividends and reliable performance. EPD is often considered the leader of the midstream MLPs, and rightfully so: EPD shares have outperformed most MLPs YTD:

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As the chart shows, EPD's share appreciation has crushed the competition's in 2012. Some worthy competitors in the MLP space are: Kinder Morgan Energy Partners LP KMP, Energy Transfer Partners LP ETP, Buckeye Partners LP BPL, and Enbridge Energy Partners EEP. Let's dig deeper and investigate some fundamentals:

Stock: EPD KMP ETP BPL EEP
Current Price: 53.40 82.77 42.72 49.42 29.46
TTM Dividend Yield: 4.8% 5.9% 8.4% 8.4% 7.1%
TTM Payout: 2.54 4.92 3.58 4.15 2.17

2011 Payout:

2.41 4.58 3.58 4.03 2.09
2010 Payout: 2.29 4.32 3.58 3.83 2.02
Div Growth Since 2010: 10.9% 13.9% 0% 8.35% 7.4%
DRIP Bonus: 5% 0% 5% 0% 2%

'12 YTD Share Growth:

15% -4% -6% -22.5% -11%
Revenue 2011 (millions): 44,313 8,211 6,850 4,760 9,110
Revenue 2010 (millions): 33,739 8,078 5,885 3,151 7,736
Revenue Growth '10-'11 31% 1.6% 16.4% 51.6% 17.7%
Missed EPS Since 1/'11? NO YES YES YES YES
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figures are as of 8/31/12 4 pm

Summary:

Consistency: Many investors feel EPS is insignificant for MLPs, placing more emphasis on its FCF. However, I feel when a company consistently meets expectations, it proves the predictability of their business, and therefore the reliability of the dividend. If a company can't forecast its earnings, how can it accurately forecast its revenue growth or dividend growth? EPD was the only stock in my analysis to steadily meet these EPS forecasts since 2011. Therefore, we could presume EPD has a reliable business model.

Dividend: EPD's dividend growth was second only to KMP's. EPD's dividend is still impressive, boasting 31 consecutive quarterly payout increases. Plus the 5% boost from the DRIP program speaks volumes about management's view on payouts to shareholders. 4.8% seems low, but perhaps that is due to the intense price appreciation/share.

Revenue Growth: EPD's recent revenue growth was also solid by comparison to the other MLPs in the analysis. Revenue has doubled since 2008. Amazingly, revenues still increased during the downturn in 2008-2009. EPD's business seems bulletproof in this regard.

Share Appreciation: EPD's share appreciation has been nothing less than stellar. Since 1/2012, EPD shares have profited 15%, blowing away the competition.

EPD's history is solid; but let's see what the future can tell us:

Future Growth Projects Under Development: Source

The 1,230-mile Appalachia-to-Texas (ATEX) Express Pipeline is designed to facilitate development of the prolific Marcellus/Utica shale region by providing takeaway capacity for ethane from Pennsylvania, West Virginia and Ohio to the Texas Gulf Coast petrochemical market.

Seaway Pipeline: By reversing the direction of the existing Seaway Pipeline, combined with construction of a second parallel line, Enterprise and its partner, Enbridge, are providing a solution allowing approximately 850,000 barrels per day of North American crude oil stranded in the Mid-continent to reach refineries along the Gulf Coast. In the process, the initiative will create jobs, further the development of our domestic resources and promote energy security.

The Front Range Pipeline will provide an outlet for natural gas liquids ((NGLs)) from the Denver-Julesburg Basin heading to the Texas Gulf Coast, the largest NGL market in the world. As designed, the 436-mile pipeline originates in Weld County, Colorado and extends to Skellytown in the Texas panhandle, interconnecting with the Texas Express Pipeline being developed by Enterprise, Enbridge, Anadarko and DCP Midstream.

Organic Growth:Source

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Summary:

More research should be done on EPD, but this is a great starting point. From my analysis, EPD seems like it is firing on all cylinders. It has had strong performance in the past, which conveys a reliable business model going forward. The future looks bright with several large projects currently in full development. These investments should ensure a continuation of excellent performance and overall organic growth. EPD's 4.8% dividend with its 5% DRIP kicker is certainly a reassuring attribute as well.

An impressive history, promising future, and solid dividend should make EPD a secure investment.

Disclosure: I am long EPD, ETP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.