Some companies really stand out for their ability to pay dividends. Their high-yielding payouts supply investors with lucrative and reliable income streams. And some have impressively long track records of regularly increasing their payouts.
Enterprise Products Partners (NYSE: EPD) and NNN REIT (NYSE: NNN) are elite income-generating investments. At their current share prices, each has a yield above 5.5% — several times higher than the S&P 500’s 1.3% average dividend yield. Meanwhile, both have increased their payouts each year for more than a quarter century. With more dividend hikes likely, they’re great stocks to buy for the income and never look back.
Enterprise Products Partners’ distribution currently yields 6.3%. At that rate, every $100 invested in the company would generate $6.30 of annual passive income, but those payments should grow each year. The master limited partnership (MLP) — which sends investors a Schedule K-1 Federal Tax Form instead of a 1099-DIV Form each year — has increased its payouts for 26 straight years. That’s one of the longest dividend growth streaks in the energy sector.
While oil and natural gas prices are volatile, Enterprise Products Partners produces stable cash flows. It operates an integrated portfolio of critical energy midstream infrastructure such as pipelines, processing plants, storage terminals, and export facilities that generate steady earnings backed by long-term, fee-based contracts and government-regulated rate structures. The company currently generates enough stable cash flow to cover its distribution by a comfortable 1.7 times.
Enterprise Products Partners uses the cash it retains to help fund its continued expansion. The MLP currently has $7.6 billion of major projects under construction that should come online and contribute to its cash flow over the next few years. Meanwhile, it has more projects under development to fuel longer-term growth. For example, it’s working with a subsidiary of oil giant Occidental Petroleum to develop a carbon dioxide transportation network to feed into one of its carbon capture and sequestration hubs. The company has a long history of securing high-return expansion projects to fuel its growth.
The MLP also makes acquisitions when accretive opportunities emerge. For example, it bought Pinon Midstream for $950 million last year. That deal will boost its cash flow per share this year while enhancing its long-term growth prospects. Enterprise Products Partners has an elite balance sheet and the highest credit rating in the midstream sector, which gives it tremendous financial flexibility to continue making acquisitions.
