Why Enterprise Products Partners is the High-Yield Dividend Stock to Buy in December 2025

In a market where income-focused investors are increasingly wary of volatility, midstream energy companies like Enterprise Products Partners (EPD) stand out as rare havens of stability and growth. With a forward dividend yield of 6.81% as of late 2025, EPD offers one of the most compelling value propositions in the sector. But the case for buying EPD in December 2025 extends beyond its attractive yield-it hinges on a strategic inflection point in the company's capital deployment cycle and a near-term surge in free cash flow potential.

Resilient Business Model and Current Financial Performance

Enterprise Products Partners has long been a poster child for the midstream sector's fee-based revenue model. Its 50,000-mile pipeline network, coupled with long-term contracts, provides a buffer against commodity price swings, ensuring consistent cash flows. In the third quarter of 2025, the company reported net income of $1.3 billion attributable to common unitholders, with distributions increasing by 3.8% to $0.545 per unit, or $2.18 annualized. While the distribution coverage ratio of 1.5 times may seem modest, the partnership retained $635 million in distributable cash flow during the quarter, signaling a deliberate strategy to build a cash cushion amid macroeconomic uncertainty.

This financial discipline is further underscored by EPD's recent decision to expand its common unit buyback program to $5.0 billion, with $3.6 billion still available. By repurchasing undervalued units, the company is effectively deploying capital at a discount to intrinsic value, a move that should enhance returns for remaining unitholders.

Strategic Initiatives and Capital Deployment: A Catalyst for 2026

The true catalyst for EPD's long-term value creation lies in its capital expenditure (capex) strategy. By late 2025, the partnership has a $5.1 billion backlog of projects under construction, including the Bahia NGL pipeline and the 14th NGL fractionator at Mont Belvieu. These projects are expected to add nearly 600,000 barrels per day of capacity by year-end, directly addressing bottlenecks in the Permian and Haynesville basins.

What makes this phase particularly compelling is the timing. In 2026, EPD's wellhead-to-water capital deployment cycle will near completion, reducing organic growth capex to a mid-cycle range of $2.2 billion to $2.5 billion annually. This shift will free up significant discretionary cash flow, which the company has signaled will be redirected toward debt reduction and shareholder returns. For investors, this represents a strategic inflection point: the transition from growth-driven reinvestment to a more sustainable, cash-generative model.

Free Cash Flow Potential and Investor Returns

The implications of this capex shift are profound. With 2025 capex already at $4.5 billion-split between growth projects, acquisitions, and sustaining expenditures-EPD is primed to see a sharp decline in capital intensity in 2026. Analysts at Goldman Sachs, which maintains a Neutral rating on EPD with a $32.00 price target, anticipate stronger sequential performance as these projects come online, particularly in the second half of 2026. According to Goldman Sachs, the company's current 6.81% yield is underpinned by a business model that prioritizes distribution stability.

Meanwhile, the current 6.81% yield is underpinned by a business model that prioritizes distribution stability. Even with a 1.5x coverage ratio, the partnership's DCF retention in Q3 2025 suggests a buffer against near-term volatility. As capex declines and discretionary cash flow rises, this coverage ratio is expected to improve, providing a stronger foundation for future distribution growth.

A Strategic Buy in December 2025

For income-focused investors, December 2025 presents a unique opportunity. EPD's current yield is attractive, but the real value lies in its positioning at the intersection of two trends: the completion of a transformative capex cycle and the impending surge in free cash flow. With a backlog of projects set to drive near-term growth and a capital structure poised to become more efficient, EPD is transitioning from a growth story to a yield story.

Goldman Sachs' $32.00 target, while modest, reflects the market's cautious outlook. Yet for those who recognize the inflection point in EPD's capital deployment, the stock's intrinsic value is likely higher. In a sector where certainty is rare, Enterprise Products Partners offers a rare combination of income, resilience, and growth-making it the high-yield dividend stock to buy in December 2025.