Our primary goal is to realize Return on Investment (ROI) – and our belief is the best investment vehicle to achieve ROI is high-quality, dividend-paying, blue chip stocks. Enterprise Products Partners (EPD) is one I like, says Kelley Wright, editor of Investment Quality Trends.
A high-quality company that has excellent management, that knows how to keep their products/services relevant and desired, which assists the company in growing their profits, and shares a percentage of those profits with their shareholders vis a vis dividends and dividend increases, tends to have the added benefit of a rising stock share price.
Twenty-five to thirty companies with the above characteristics, diversified as equally as possible across the primary industrial sectors, purchased at their repetitive low-price, high dividend yield area, have proven over time to be the least risky and most consistent method of achieving ROI sufficient to meet current and/or future cash flow needs.
That brings me to EPD, a publicly traded limited partnership. EPD is an integrated provider of natural gas pipeline and processing services and natural gas liquids (NGL) fractionation, storage, transportation, and terminal operation services.
EPD thinks it is a leader in developing midstream infrastructure in the deepwater of the Gulf of Mexico. EPD was formed in April 1998 to acquire, own, and operate the NGL business of Enterprise Products Co. (EPCO).
EPD seeks to capitalize on expected increases in natural gas, NGL, and crude oil production resulting from development activities in the Rocky Mountain region, Permian Basin, and Gulf of Mexico; maintain a balanced portfolio of midstream energy assets; share capital costs and risks through joint ventures or alliances with strategic partners that will provide the raw materials for these projects; and increase fee-based cash flows by investing in pipelines and other fee-based businesses and de-emphasizing commodity-based activities.
Part of EPD’s business strategy involves expansion through business combinations, growth capital projects, and investments in joint ventures. EPD thinks it is well-positioned to continue to grow through construction of new facilities and acquisitions that will expand its system of assets through growth capital projects.
The partnership is looking to increase its presence in the Eagle Ford and Haynesville Shales and the Permian Basin. EPD is also expanding its NGL operations at Mont Belvieu, Texas. EPD has paid dividends since 1998.
Recommended Action: Buy EPD.
