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Enterprise Products Partners declares $0.4375 dividend

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Bought at $15 average over 10 years. I have shed many MLPs with losses over this time. I too got slammed by Richard Kinder. EPD is an aristocrat among not only MLPs but C Corp Pipelines as well. I will hold until my death at which time my heirs will get stepped up basis. Patience and buying an MLP whose founder’s heirs had the good sense to buy its General Partner eliminating IDRs has created a slow moving ever growing behemoth of this industry. Even I do something right once in a while.
same with me, I have owned it for 4 years now, cost down below $20, with all those payments figured in.
Even with the small increase, it puts me at 7.67% personal yield since I averaged $22.81 when I made my purchases in November 2017. At this point, I want to see the stock go above $30 and maintain those small dividend increases. This is simply a solid investment.
Another 1/4 of a cent per Unit which when it comes I can invest or buy prescription drugs with. Sold "Covered Calls", for $29 and $30, unequally at $29, but I probably should have waited until the past month or so. I paid $23.67 for the Units so I didn't realize it could rise so quickly until I realized they were repurchasing a lot of units and really going without further dilution, like Magellan.
Excellent long term Trust component as well as Discretionary account cyclical winner 🏆.

1 of several companies that I have made very large repetitive capital gains on. I learned to keep track of this and knowing which companies I naturally follow with greater accuracy helps us avoid the trading the ones I do poorly with their cyclical natures.
Selling covered calls against a partnership is inviting a whole bunch of tax uncertainty.
ridiculous increase. these damn companies need to start rewarding shareholders with real increases
don't know nothing profile picture
Not sure pipeline companies have the $$ to give. They have defined pay outs they must provide so they hold nothing back.
Jim Kimmelman profile picture
Most companies last year and this year are moving towards self funding. De-leveraging and no longer going to issue equity to finance growth prospects.

EPD has one of the safest dividends in the MLP world and it will continue to grow.
I think EPD could step up the payout a little while still putting money aside for projects.This payout is to the point that it wont keep up with inflation.
J Mintzmyer profile picture
2.3% annualized growth while self funding all growth, delevering, and repurchasing a bit, all at the same time. I hope 2.3% outpaces inflation!
Jason Z profile picture
DCF is growing much faster than 2.3%
J Mintzmyer profile picture
Right, just saying the payout is going up 2.3% while they are achieving all the other things at the same time. They've guided 2019 to be another 'transition year' and then the taps will come back online in 2020.
@mad.....funny, better than a lump of coal too! if your a little frustrated, then try ET like me and you know what frustration really is but I think Warren will prevail and ET shareholders win make plenty down the road too... very long both.
I wanted to take a moment to cheer on management.

Leverage has dropped from 4.4 in 2016 to 3.5 today.

Yet return on total capital or accounting WACC has increased from 10.2% to 12.6% today.
When debt is 1/3 the cost of equity, this is a happily startling improvement.

Yes return on existing assets due to improving utilization is a key reason why. BUt also the new projects are clearly earning returns well in excess of WACC. There is nothing better than increasing the practical capacity of existing processing assets. This is an important piece to.

These puny distribution increases are much like getting socks for Christmas. Keeping your feet warm is important. But it is not exciting.

This management follows the Graham and Dodd financial discipline. So they are deploying our capital in the most productive way. Not only are they avoiding issuing extremely costly new equity. But they are going to buy back $2 billion.

The unit price is up but still depressed. Surely the puny distribution increases contribute to this. BUt if EPD is self funding with retained capital, this drops out of the math. This is what the puny increases + buy back are informing us of.

At some point management will have so much cash up the wazoo they will have to speed the rate of distribution increases. There are limits to the amount of capital projects even the EPS team can effectively manage. This management is not the sort to just keep through balls in the air no matter how good the ROC is. Even with solid take or pay contracts from customers.

As I would like to really retire sooner rather than later to lakeside Tennessee, I wish this upon EPD management sooner rather than later. Management I wish you an extreme case of cash up the wazoo and my thanks for being talented/ethical.
Mad, thoughtful and excellent summary of several key issues. The combo of share buybacks and new, higher margin capacity expansions coming on line should make the rest of 2019 an excellent run.
Thank you SK. Good investing fortune to us both!
If you read between the lines from recent management comments, I believe we can expect a higher dist growth (or at the very least mgmt will evaluate) in 2020. I believe they maintained current growth rate to complete the self-funding model while also allowing them flexibility to continue adding growth projects
I have no problem as long as it increases and considering they are moving more toward self funding in a year or so I think the increases will increase
Glad to see they're strengthening the balance sheet rather than increasing distributions. If there is a recession we'll be very glad they made this decision.
ephud profile picture
A rather meager increase but better than nothing.
Long EPD. Positive future growth rate and undervalued 5 or 6 bucks.
rcpatrick5443 profile picture
It's nice that it's an increase and that it is a reasonable one for EPD's business.
Beats a sharp stick in the eye as my mom used to say.
Also known as getting KMI-ed
MyPrivilegeIsShowing profile picture
My dad would say, "better than a kick in the ass".
KMI was definitely overleveraged, but, now, has a much better balance sheet, leverage is headed lower and currently funds all dividends and capex from cashflow. EPD is still stronger, but KMI has made a very good comeback
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