Best Dividend Paying Stocks Enterprise Products Partners (NYSE: EPD)

Enterprise Products Partners EPD

The dividend paying stocks I would like to profile today have been on my radar screen for quite some time.  Enterprise Products Partners L.P.  is organized as a Master Limited Partnership (MLP).  However, before I present the profile, I would like to discuss briefly what a Master Limited Partnership is and how it works.

Simply put, an MLP is a publicly traded limited partnership.  An investor purchases shares of ownership which are referred to as units, similar to owning shares of stock in a company.  Once you own units in an MLP you are considered a unitholder (partner).

MLP’s are not subject to corporate income tax as long as they pass through 90% of their income to their partners.  Partners receive an IRS Schedule K-1 from the master limited partnership for dividend income received and are taxed at the unitholder level.  If you are unfamiliar with MLP’s, take some time to do some research before investing.  MLP’s can pay a portion of their dividend income in the form of unrelated business taxable income (UBTI).  This can cause a problem if you hold an MLP in a tax-deferred account and collect more than $1000 in UBTI.  For this reason, MLP’s are best held in a taxable brokerage account.

Enterprise Products Partners LP (NYSE: EPD)
Business: Energy MLP   Annual Dividend: $2.39 Yield: 5.57%
Payment Frequency: Quarterly   Recent Price: $44.15

Enterprise Products Partners L.P. is an energy sector MLP based out of Houston Texas. EPD is the largest publicly traded energy partnership in the nation and is a leading provider of energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products and petrochemicals.   Since it’s initial public offering in July of 1998, EPD has grown it’s asset base from $715 million to $31 billion by December of 2010.  The asset base is broad and diverse. Here are just a few of their assets…

Enterprise Products Partners pipeline image

Pipelines

  • 50,200 miles of natural gas, NGL crude oil, refined products and petrochemical pipelines

Storage (Salt Dome)

  • 192 million barrels of NGL, refined products and crude oil storage capacity
  • 27 billion cubic feet of natural gas liquid (NGL) storage capacity

Natural Gas Processing

  • 25 natural gas processing plants

Marine Services

  • 58 tow boats
  • 117 barges

Fractionation

  • 19 NGL and propylene fractionators

Platforms

  • 6 offshore hub platforms

NGL Import/Export Terminals

  • Houston Ship Channel Import Terminal capacity – 14 thousand barrels per hour
  • Houston Ship Channel Export Terminal capacity – 7 thousand barrels per hour

New shale extraction technologies that allow for the extraction of natural gas from shale have been a windfall to the U.S. energy sector. Production has tripled from 2007 to 2010.  Net imports of natural gas in the U.S. have fallen significantly by 1.2 trillion cubic feet over the last three years, primarily due to new domestic reserves coming online.

As new domestic sources of natural gas come to market, the demand for new and expanded pipeline systems increases. For pipeline service providers like EPD, that translates into record profits.  EPD announced record results for the first quarter of 2011.  Revenues increased 19% versus the first quarter of 2010.  Net income per unit was $0.49 compared to $0.33 in the first quarter of 2010.

Dividend-Paying-Stocks.net loves the best dividend paying stocks and Enterprise Products Partners L.P. has an amazing track record for paying steady dividend income.  EPD raised it’s quarterly dividend to $0.6125 from $0.6050 making it the 29th consecutive quarter this MLP has raised it’s quarterly dividend. It was also the 38th time EPD has raised it’s dividend since 1998.

(full disclosure: I own shares of EPD)

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