Is Enterprise Products Partners L.P. (EPD) the Best Dividend Stock to Buy Under $50?

Enterprise Products Partners L.P. (EPD) has long been a favorite among income investors, thanks to its high and stable dividend yield. With a current price of around $31.50, EPD is an attractive option for those looking for a dividend stock under $50. But is it the best choice? Let's take a closer look at EPD's dividend growth, sustainability, and potential for future growth.

EPD's dividend has grown at a CAGR of 5.5% over the past decade, outpacing the 3.5% growth of the S&P 500 and the 4.5% growth of its peers in the energy sector. Its current yield of 6.7% is also higher than the sector average of 5.5% and the S&P 500's 1.2%. This impressive dividend growth and yield are supported by EPD's diversified midstream energy infrastructure, which generates stable cash flows and helps insulate the company from commodity price fluctuations.

EPD's dividend payout ratio is approximately 6.67%, which is relatively low compared to other midstream energy stocks. This low payout ratio suggests that EPD is retaining a significant portion of its earnings, allowing it to reinvest in its business and maintain its competitive advantage. Additionally, EPD's consistent history of dividend increases, with 26 consecutive years of growth, further supports the sustainability of its dividend payout.



EPD's strong balance sheet and credit rating also support its ability to maintain and increase dividends. As of 2024, EPD has a market capitalization of $68.26 billion, with total cash and cash equivalents amounting to $1.43 billion. Its free cash flow for the trailing twelve months stands at $1.25 billion, indicating a robust cash-generating capacity. Moreover, EPD's investment-grade credit rating of A reflects a high credit quality with a low default risk.

However, investors should consider the risks associated with EPD's exposure to commodity price fluctuations and the potential impact of regulatory changes on its operations. Additionally, EPD's high dividend yield may make it less attractive to investors seeking capital appreciation.

In conclusion, Enterprise Products Partners L.P. (EPD) is a compelling dividend stock under $50, thanks to its diversified midstream energy infrastructure, impressive dividend growth, and strong balance sheet. While there are risks to consider, EPD's high yield and consistent dividend increases make it an attractive option for income-oriented investors. However, it's essential to conduct thorough research and consider your investment goals and risk tolerance before making a decision.