EPD offers a stable 5.8% yield via toll-booth fees; currently slightly undervalued but a pullback is preferred for entry.
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Okay. Now, the next company's actually in the energy industry. So, I hesitated on this one a bit because on the investors grow website, when you go over to the sectors tab here, well, here we can see this chart.
This is a chart year-to- date of the performance of each sector. The purple bar in the middle, that's the S&P 500. Not even in the middle. S&P 500. Anything to the right of that is underperforming.
Everything to the left of that is outperforming the S&P 500. You can see right now the best performing industry is energy for probably very obvious reasons. But this company, which is Enterprise Product Partners, is a midstream company.
So in the energy industry, there's actually three different call it sectors or subsectors within the energy industry. Upstream, these are the companies that pull oil and gas out of the ground. mid-stream companies that ship it and store it, downstream companies that refine it and sell it. This is a midstream company.
Now, the advantage to that is they don't necess they get paid fees that you could think of them like toll booth collectors. They collect uh they collect fees for moving oil and gas for moving you know natural gas or from you know storing it.
If they were to they have storage facilities if they store it they charge a fee for it. So, it's a far more predictable business.
And what you end up with is a dividend yield that looks like this. We get a 5.8% dividend yield. It's been steadily growing for a while. It's a fairly consistent dividend yield because again with this type of companies, it it tends to be a bit more predictable,
especially when you think about, you know, if we jump over real quick and just look at a price of oil. Well, oil over the past few months, again, for obvious reasons, has been all over the place.
But as long as they're still moving oil, as long as they're still shipping oil, especially in North America, which is the important part here. I'm not talking about the straight of Hermuz moving it.
I'm talking about moving it around North America, this company should do fairly well.
Now, we can see that this stock is up a bit over the past year. So, I would like to see it pull back just a little bit. Now, this company does have a lot of projects that they're working on right now.
They get about $6.5 billion in projects that they've been working on to try to expand what they're doing and try to improve their overall business. So, there's some execution risk with that we could call it.
But overall, I think that this is a real interesting company, a real interesting way to go after the energy industry that even if oil prices stay super volatile, but we want to get involved with a company that again has a dividend yield of over 5%, this one could be interesting.
Now, when we jump over and look at discounted free cash flow, which could work for this type of company, we can see going out the next decade, it's not very undervalued, but it is a hair undervalued.
So, this might be an interesting one to do some research on. Hopefully, we can get a pullback.
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What this channel has said about $EPD
Learn to Invest - Investors Grow has only this one call on this stock.