This Magnificent Dividend Stock Continues to Pump More Income Into Its Investors' Pockets

Enterprise Products Partners (NYSE: EPD) has a sparkling track record of paying dividends. The master limited partnership (MLP) has distributed the same level of cash, or more, to its investors every quarter since it has been a publicly traded company. Last year, it passed the quarter-century mark of consecutive years of increasing its cash distribution.

The pipeline company has continued that trend this year. It recently delivered its second distribution increase of 2024. With visible growth coming down the pipeline and an elite balance sheet, the MLP has plenty of fuel to continue pumping more income into its investors' pockets.

A financial fortress

Enterprise Products Partners recently declared its latest distribution payment . The quarterly payout was nearly 2% above last quarter's level and 5% higher than the year-ago rate. That's a pretty decent growth rate for a company with a yield as high as Enterprise Products Partners, which is currently over 7%.

That high-yielding payout is on an extremely sustainable foundation. The midstream company generates very stable cash flow backed by long-term contracts and government-regulated rate structures. It also has a very diversified and integrated midstream business, which contributes to the overall stability of its cash flow profile.

Over the past 12 months, Enterprise Products Partners has generated $8.2 billion of adjusted cash flow from operations. That easily covered the $4.4 billion of cash it distributed to investors over the past year. The company's conservative payout level enabled it to retain enough cash to fund its investment spending of $3.6 billion over the past year with room to spare. That allowed it to return a little more money to investors through unit repurchases of $200 million while maintaining a strong balance sheet.

Enterprise Products Partners has one of the strongest balance sheets in the midstream sector. It has a high credit rating of A-/A-/A3 and a low leverage ratio of 3.0. That gives it tremendous access to low-cost capital, enhancing its financial flexibility.

Ample fuel to continue pushing the payout higher

Enterprise Products Partners has spent billions of dollars over the years to expand its integrated midstream business through organic expansion projects and acquisitions. The company invested $2.9 billion into growth capital projects last year, which included spending $65 million in the fourth quarter to buy the Wilson natural gas storage facility. Those investments have helped grow its cash flow, which enables it to continue increasing its distribution.

The MLP currently has lots of growth already lined up. It ended the first quarter with $6.9 billion of approved major projects under construction. Those projects should come online and contribute to its cash flow through the first half of 2026.

The company has many more projects under development. They range from large opportunities such as its proposed Sea Port Oil Terminal to smaller expansions of existing assets: It's evaluating new pipelines, processing plants, storage hub expansions, and petrochemical projects.

Enterprise Products Partners also has the financial capacity to make acquisitions as opportunities arise. For example, it bought an additional interest in the Panola Pipeline Company from Western Midstream for $25 million earlier this year, increasing its stake to 70%. The MLP also acquired Western Midstream's interests in two joint ventures, Whitehorn Pipeline Company and EF78, for $375 million, giving its full control over those assets. With its excellent credit rating and low leverage level , Enterprise Products Partners can continue to capitalize on accretive acquisition opportunities. Future deals will supply it with incremental cash flow to further support distribution growth.

An exceptional income investment

Enterprise Products Partners has done a magnificent job distributing cash to its investors over the years. The MLP recently raised its per-unit payout for the second time this year, continuing a growth streak that is more than a quarter-century-long. With more growth ahead, it's an appealing choice for income-seeking investors comfortable with the added complexities of investing in an MLP, which sends investors a Schedule K-1 tax form each year.

Matt DiLallo has positions in Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy .