In this article I compare the long-term potential of Enterprise Products and Energy Transfer. I compare both companies on measures of valuation, business focus, growth plans, and distribution coverage. I believe Energy Transfer comes out on top to generate the most profitable total returns for investors.
The outlook for Enterprise Products Partners remains resilient amid mixed energy market sentiment and cautious investor outlook, supported by diversified earnings and robust midstream cash flows. EPD's low-cost Permian assets and focus on NGL and natural gas position it to benefit from strong domestic demand and export growth, despite global supply headwinds. Lower capital spending through FY2027 is expected to drive higher DCF per unit growth and support attractive earnings distributions for unitholders.
Enterprise Products Partners offers a 6.97% yield, strong balance sheet, and 27-year track record of distribution growth, appealing to conservative income investors. EPD's cash flows remain stable despite declining crude oil prices, as its diversified asset base and focus on natural gas liquids position it for future growth. The company is expanding with new processing plants and the Bahia Pipeline, capitalizing on rising global demand for ethane and natural gas liquids exports.
Enterprise Products faces margin pressure from its Permian exposure and heavy debt load, raising questions about its investment appeal despite steady revenues.
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Enterprise Products Partners has completed a strategic Midland Basin acquisition from Occidental Petroleum. EPD acquired used assets (likely) at a discount to building them new. The acquired assets offer further upside through debottlenecking and add-on projects.
Hewlett Packard Enterprise is rated a buy, as the Juniper acquisition transforms it into a networking and AI infrastructure leader. The Juniper deal accelerates HPE's shift to higher-growth, higher-margin networking, with networking now expected to drive over 50% of operating profit. AI systems and hybrid cloud momentum, especially with Alletra MP and GreenLake, are fueling robust revenue growth and margin expansion for HPE.
Enterprise Products Partners' massive 7% yield and cash flow inflection point look attractive. However, one key risk looms large. I break down why I'm still bullish on EPD while keeping a close eye on this hidden risk.
Enterprise Products Partners stands out for its consistent cash flow growth, resilience, and strategic expansion in the Permian Basin. EPD's recent acquisitions, including assets from Occidental Petroleum, strengthen its core natural gas business and support long-term distributable cash flow growth. Enterprise Products Partners' DCF increased 7% year-over-year in Q2'25, in part driven by past acquisitions. EPD is set to stem more acquisitions going forward, in my opinion.
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EPD's $6B midstream projects promise incremental cash flows, adding to its long history of stable, fee-based income.
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