Look No Further, Your Next Investment Is Right Here $EPD
The only thing a company can do to increase its attractiveness to shareholders better than increasing revenues is increasing dividends, and this company is doing both. This is a massive company that is poised to move forward in a big way, getting on board has never looked better.
EPD is a buy at almost any time. When it has just announced two more dividend/distribution raises, it is even more of a buy. When it has a pipeline of projects set to add further to its earnings in the near term, it is again more of a buy. When its new expansions will increase exports, which should lead to higher US NGLs prices, it is more of a buy. This is a huge company with an enterprise value of $63.62B and a market cap of $48.35B. It has a total return since 1998 that is approaching 2000%. The S&P 500 return does not even begin to compare. Few companies have as stellar a record of success as EPD. It is currently trading at a PE of 19.92 and an FPE of 21.20. I am not sure why that last figure is not lower, but EPD’s growth is astounding. Perhaps some think it will take until 2014 to really see things take off, but the growth stories of stocks do not get much better than EPD’s.
On September 20, 2012, Enterprise Products Partners LP (EPD) announced that pending approval, it would increase its dividend to $0.65 for Q3 2012 and $0.66 for Q4 2012. EPD announced that several projects had exceeded expectations. This raise seems a done deal. EPD would not announce this unless it was sure to be approved. If you extrapolate the last raise, this means the dividend for EPD will soon be 4.83% annualized. According to the Associated Press these increases are due to “several projects having exceeded production expectations.” AP did not specifically say which or why. However, EPD has huge infrastructure and it has huge growth projects that should see dividends move much higher in the near future.
One of the good items has to be the start up of the second train at the Yoakum Natural Gas Processing Facility in the Eagle Ford shale. This was announced September 10, 2012. This will increase the extraction capability of the plant to 74,000 bpd of NGLs. EPD’s Seaway Pipeline reversal opened in May 2012. I am sure both EPD and its 50% partner, Enbridge (ENB), are profiting greatly from this. It has the capacity to bring 150,00 bopd from the log jam in Cushing, OK to the Texas Gulf Coast. It’s utilization has to be near 100%. EPD plans to bring the first expansion of this pipeline (+250,000 bopd) online in Q1 2013. This too will get completely booked quickly, if it is not already. From the way EPD is gushing, this project may be ahead of schedule.
EPD recently opened its Phase I Eagle Ford oil pipeline. This is a 350,000 bpd pipeline that moves oil 147 miles from Wilson County to Sealy, Texas, where EPD has its huge ECHO crude oil terminal. This is not fully completed yet. When it is done it will provide access to approximately 4 million bpd of refining capacity. This too should give EPD a nice earnings boost in the near term. On August 6, 2012, EPD announced that it had taken on a partner, Plains All American Pipeline (PAA), in the furtherance of this venture. The joint venture will extend the line from Gardendale in LaSalle County to Three Rivers in Live Oak County. From there it will continue on to Corpus Christi. The JV will also build a new 35-mile pipeline segment from Three rivers to EPD’s Lyssy station in Wilson County. The facility will include a marine station in Corpus Christi and 1.8 million barrels of storage capacity across the system. Parts of this system are scheduled to go online in Q4 2012. The rest are scheduled to go online in 1H 2013. The tariff rate will be $1.25 per barrel from Gardendale to all destinations. This sounds like another big money maker. With the prolific Eagle Ford feeding it, it is sure to stay nearly 100% busy for some time.
EPD is on schedule to bring the third train for the Yoakum Natural Gas Processing Facility online in Q1 of 2013. This will increase extraction capacity to 111,000 bpd of NGLs. A 173-mile extension of EPD’s NGL pipeline system from Yoakum to LaSalle County, Texas is on schedule to begin service in Q2 2013.
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