EPD Stock: Is Enterprise Products a Buy? | NGL Pipeline Play

Enterprise Products Partners is the largest midstream MLP in America, operating 50,000+ miles of NGL, crude, and natural gas pipelines with a 26-year track record of distribution increases — the quintessential real asset tollbooth for income-focused investors.

Last updated: 2026-02-02 · Data: Yahoo Finance, SEC filings, company investor presentations

The Business

Enterprise Products Partners operates America's largest network of natural gas liquid (NGL) pipelines and storage facilities — 50,000 miles of pipes moving propane, butane, and ethane from shale fields to petrochemical plants and export terminals. Think of EPD as the interstate highway system for molecules that power everything from plastic bottles to heating fuel.

This is tollbooth capitalism at its finest. EPD doesn't own the oil and gas — it moves other people's hydrocarbons for a fee. The company charges based on volume transported, not commodity prices, creating steady cash flows regardless of whether oil trades at $60 or $100. With long-term contracts averaging 7-15 years and cost-of-service agreements, EPD collects rent on America's energy metabolism.

The partnership's integrated network includes 260 million barrels of storage capacity, 14 billion cubic feet of natural gas processing, and marine terminals capable of loading supertankers. When Exxon produces NGLs in the Permian, when Dow Chemical needs ethylene feedstock, when Asian buyers want American propane — those molecules flow through Enterprise's pipes.

By the Numbers

The Tollbooth Thesis

Enterprise sits at the center of America's shale revolution 2.0. While crude oil gets the headlines, the real action is in natural gas liquids — byproducts of gas drilling that have become essential petrochemical feedstocks. U.S. NGL production has tripled since 2010, and EPD built the infrastructure to move this flood of molecules to market.

The partnership is executing a $4 billion capital program focused on export capacity and petrochemical connectivity. The new Orbit Gulf Coast marine terminal will double propane export capacity, while pipeline expansions connect Permian producers to Louisiana's chemical corridor. With U.S. NGL exports projected to grow 40% by 2028, Enterprise's pipes become more valuable every year.

Regulation works in EPD's favor through FERC oversight and state utility commissions that approve pipeline routes and rate structures. Once built, these assets operate as geographic monopolies — you can't easily replicate 50,000 miles of underground pipe. The replacement cost of EPD's network exceeds $100 billion, yet the market cap is $72 billion.

The Risks

• Commodity exposure: While fee-based, some contracts include commodity price floors that can impact margins during severe downturns

• Leverage concerns: 113% debt-to-equity ratio leaves little room for error if cash flows deteriorate

• Regulatory shifts: ESG pressure and renewable mandates could impact long-term demand for fossil fuel infrastructure

• Capital intensity: Growth requires continuous reinvestment, limiting free cash flow available for distributions

• Geographic concentration: Heavy exposure to Texas and Louisiana creates hurricane and regulatory risk

Income Angle

EPD has raised its distribution for 30 consecutive years — through the 2008 financial crisis, the 2020 pandemic, and multiple oil busts. The current 6.4% yield sits below the five-year average of 7.3%, suggesting the distribution is well-covered despite elevated payout ratios.

As an MLP, Enterprise passes through cash flows to unitholders without corporate taxation, creating tax-advantaged income. The partnership targets 3-5% annual distribution growth, funded by fee-based cash flows and organic growth projects. For income investors seeking real assets that hedge against inflation and currency debasement, EPD offers exposure to America's energy infrastructure with quarterly payments that have compounded for three decades.

The Bottom Line

Enterprise Products Partners owns the plumbing of America's energy system — infrastructure that becomes more valuable as domestic production grows and export demand accelerates. At 13x earnings with a 6.4% yield backed by fee-based cash flows, EPD trades at a discount to replacement cost while offering income growth tied to the continent's energy abundance.

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Frequently Asked Questions

Is Enterprise Products Partners (EPD) a good investment for income?

EPD is considered the gold standard among midstream MLPs for income investors. The 7%+ yield is backed by 26 consecutive years of distribution increases, investment-grade credit, and fee-based cash flows. The caveat is that as an MLP, EPD issues a K-1 tax form rather than a 1099, which complicates tax filing for some investors.

What is the difference between EPD and KMI?

EPD is structured as an MLP (Master Limited Partnership) that passes through cash flows to unitholders, offering higher current yield but K-1 tax complexity. KMI is a C-Corp with simpler 1099 tax treatment but lower yield. EPD focuses more on NGL and petrochemical infrastructure, while KMI is more natural gas pipeline-oriented.

How does Enterprise Products Partners generate revenue?

About 85% of EPD's gross operating margin comes from fee-based contracts for transporting, storing, and processing natural gas liquids, crude oil, and petrochemicals. This tollbooth model provides stable cash flows regardless of commodity prices, supporting the distribution through commodity cycles.

What are EPD's risks?

MLP structure complexity (K-1 tax forms, UBTI issues in IRAs), long-term demand risk for NGL products, and regulatory risk on new pipeline projects. The company's conservative financial management and low leverage mitigate many of these risks, but the MLP structure itself deters some institutional investors.

This analysis is part of Energy Macro's Tollbooth Royalties research. For our complete infrastructure income framework, see The Blackout Fortune Playbook.

Last updated: February 1, 2026 | Data: Yahoo Finance, SEC filings, company investor presentations