Enterprise Products Partners (NYSE: EPD) operates in the most reliable segment of the energy industry. It is financially strong, has reliable cash flows, and a large yield.
But there’s one little problem that may cause investors to pause. Enterprise Products Partners’ unit price has rallied roughly 60% over the past five years. Is it still worth buying this master limited partnership (MLP)? The answer is yes, and here’s why.
To simplify things a lot, Enterprise is a toll taker. It owns energy infrastructure, like pipelines, that move oil and natural gas around the world. It doesn’t care all that much about the price of the commodities it is moving through its system. It cares that it moves as much volume as possible through its systems, collecting fees for every unit of product it moves.