Latest news with #midstream
Yahoo
a day ago
- Business
- Yahoo
Is Energy Transfer the All-American Dividend Stock for You? Consider This High-Yielder Instead.
Energy Transfer has a lofty 7.4% yield backed by an inherently domestic business. The midstream giant has made some decisions that should leave conservative investors with trust issues. Enterprise Products Partners' 6.9% yield will likely be a better fit for most investors. 10 stocks we like better than Energy Transfer › Dividend investors are always trying to maximize yield, but that requires extra consideration on the risk front. A high yield that isn't backed by a reliable company could leave you in the lurch and, likely, at the worst possible time. This is why investors looking at Energy Transfer (NYSE: ET) and its lofty 7.5% distribution yield will probably be better off taking a little less yield and choosing Enterprise Products Partners (NYSE: EPD) instead. Here's why. Energy Transfer and Enterprise are two of the largest midstream companies in North America. They both hail from the United States and generate most of their business from the country. The truth is, owning energy infrastructure assets like pipelines essentially forces these two businesses to be American at heart. After all, you can't move oil around the United States on a pipeline that gets built in Europe. That pipeline has to get built on U.S. soil. The midstream is actually the most boring segment of the overall energy sector. That's because businesses like Energy Transfer and Enterprise charge fees for the use of their assets. Although the oil, natural gas, and other products that flow through the system may have volatile prices, midstream companies don't really care about the price of what they move. They just care about the volume of product they move. The higher the volume, the higher the toll-like revenues they generate. Given the importance of energy to the global economy, demand for oil and natural gas tends to remain fairly robust even when commodity prices are weak. Even recessions don't materially diminish demand, since the world would, literally, stop in its tracks without oil and natural gas. From this perspective, Energy Transfer and Enterprise Products Partners are on equal footing. Here's the thing: Energy Transfer doesn't have the same history of treating its investors well as Enterprise does. That difference is why conservative income investors should be happy to trade down to Enterprise's 6.9% yield. The first big issue happened in 2016, during a time when oil prices were weak. At that point, Energy Transfer agreed to buy peer Williams. It got cold feet, warning that completing the deal would require taking on too much debt and could also force a dividend cut. It was the right decision to scuttle the deal. The problem was the way in which it achieved that end. The company sold convertible securities, with a huge portion going to the then-CEO. It appears that the convertible securities would have protected the CEO from the effect of a dividend cut, had a dividend cut been needed. In the end, Energy Transfer got out of the Williams deal, but that convertible decision should leave a bad taste in investors' mouths. Then, in 2020, when the energy industry was hit hard by demand declines around the coronavirus pandemic, Energy Transfer cut its distribution. Again, the decision was probably the right one for the business, which used the freed-up cash to strengthen its balance sheet. But income investors took it on the chin, and that's the key takeaway here. During the last two big energy industry downturns, when income investors were likely hoping for consistency, they had to worry about, and actually experience, income declines if they owned Energy Transfer. Enterprise Products Partners didn't cut its distribution in 2016 or in 2020. It didn't put out any warnings that such an event was possible. It just operated its reliable cash flow generating business. Along the way, it delivered distribution increases. At this point, the U.S. midstream giant has increased its distribution for 26 consecutive years. While trust might be a troubling issue with Energy Transfer, it isn't with Enterprise Products Partners. The long streak of putting unitholders first is a core reason to like Enterprise Products Partners, but it isn't the only reason. Other good reasons to like this midstream giant are its investment grade rated balance sheet, and the 1.7x over that its distributable cash flow covered its distribution in 2024. These are both signs of management's commitment, since they mean there's a lot of leeway before a distribution cut would be in the cards at Enterprise Products Partners. Put it all together, and most investors will probably be better off with all-American Enterprise over all-American Energy Transfer. Before you buy stock in Energy Transfer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Energy Transfer wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy. Is Energy Transfer the All-American Dividend Stock for You? Consider This High-Yielder Instead. was originally published by The Motley Fool
Yahoo
25-05-2025
- Business
- Yahoo
Should You Buy High-Yield Enterprise Products Partners While It's Below $36?
Enterprise Products Partners is a midstream master limited partnership (MLP). The MLP charges fees for the use of its assets, producing reliable cash flows through the energy cycle. The last time Enterprise traded around $36, the yield was below 4%, which won't be the case this time around. 10 stocks we like better than Enterprise Products Partners › Enterprise Products Partners (NYSE: EPD) is trading a little under $32 per share and offering a distribution yield of nearly 6.8%. That's attractive when you consider that the S&P 500 index (SNPINDEX: ^GSPC) only offers 1.3%, and the average energy stock just 3.6%. Does that make Enterprise Products Partners a buy? And why is the $36 price point so important? Before looking at Enterprise's yield and unit price, it is important to understand the business behind both of those first two numbers. Enterprise is a large North American midstream company. That means it owns things like energy pipelines and storage, processing, and transportation assets. These are large and expensive infrastructure assets. The energy sector couldn't operate without them. Unlike oil and gas producers and chemical and refining companies, volatile commodity prices aren't the key determinant of Enterprise's financial success. That's because it charges fees for moving commodities through its system; the price of what is being transported isn't all that important -- demand is. And demand tends to be robust even when energy prices are low because oil and natural gas are so important. Thus, Enterprise tends to produce reliable cash flows to back its large distribution. Over time, Enterprise grows by expanding its portfolio of assets (via ground-up construction or acquisition) and by increasing the fees it charges its customers. The trend has historically been a slow and steady rise in revenue over time. And that has resulted in a slow and steady increase in the distribution over time. Enterprise's distribution has grown every year for the past 26 years. That's an impressive amount of consistency given the inherent volatility of the energy sector. An investment-grade balance sheet and generally conservative management style have helped a lot over the years. What is so important about $36? That price is near the historical high point of Enterprise's stock, last seen in the 2014 to 2015 period. So, in essence, the question here is really, "Should investors buy this midstream Master Limited Partnership (MLP) as it closes back in on its all-time highs?" The question is best answered by looking at the distribution yield. In 2014 and 2015 when Enterprise was trading above $36 per share, the yield was below 4%. That yield level represents the lowest yields in the MLP's history. But that was roughly 10 years ago, and a lot has changed. The most important change, however, is that Enterprise's distribution has grown each and every year. So at the current unit price, which is a bit below $32, the yield is 6.7%. If the price rose to $36, the yield would still be roughly 6%. Historically speaking, that's still an attractive yield for Enterprise. Compared to the energy sector, that's still an attractive yield. And compared to the S&P 500 index, that also is still an attractive yield. In the 2014 to 2015 time period, investors were smitten by midstream businesses, bidding them up to lofty valuation levels. That's not the case today. A growing business and a growing distribution have powered Enterprise's price rise. Given the attractive yield, most dividend investors will likely find it a worthwhile addition even as it closes in on its previous all-time highs. Before you buy stock in Enterprise Products Partners, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Enterprise Products Partners wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,688!* Now, it's worth noting Stock Advisor's total average return is 957% — a market-crushing outperformance compared to 167% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy. Should You Buy High-Yield Enterprise Products Partners While It's Below $36? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
21-05-2025
- Business
- Globe and Mail
ET Stock Outperforms its Industry in a Month: Time to Buy or Hold?
Units of Energy Transfer LP ET have rallied 6% in the last month compared with the Zacks Oil and Gas - Production Pipeline - MLB industry's growth of 3.4%. The oil and gas midstream firm owns a wide network of pipelines across the United States and is pursuing opportunities to serve the growing power loads from new demand centers across its network. The firm is also a top exporter of liquefied petroleum gas and is working to expand natural gas liquids (NGL) export facilities to cater to the rising demand for NGL globally. The ET stock has also outperformed its sector in the last month. Price Performance (One Month) Should you consider adding ET to your portfolio only based on positive price movements? Let's delve deeper and find out the factors that can help investors decide whether it is a good entry point to add ET stock to their portfolio. Factors Acting as a Tailwind for ET Stock Energy Transfer LP operates a vast pipeline network exceeding 130,000 miles across 44 U.S. states. The company continues to expand its reach through a combination of strategic acquisitions and organic growth initiatives. Since 2021, Energy Transfer has completed at least one major accretive acquisition each year, including the acquisition of WTG in the previous year, which strengthened its natural gas pipeline and processing capabilities in the Permian Basin. Energy Transfer's assets are strategically located across major U.S. production basins and high-demand regions, providing a solid foundation for earnings. Its diversified portfolio — including oil and gas pipelines, gathering and processing systems, and storage facilities — enables the company to efficiently serve a wide array of markets. The company also has substantial export capabilities, with the capacity to export over 1.1 million barrels per day of NGLs and 1.9 million barrels per day of crude oil. Ongoing expansion efforts at the Marcus Hook and Nederland terminals are enhancing these capabilities. Notably, Energy Transfer holds an estimated 20% share of the global NGL export market, reinforcing its strong presence in international energy trade. Energy Transfer is actively exploring opportunities to meet the rising power demand from emerging load centers along its pipeline network. The company has finalized multiple agreements with electric utilities in the Midwest to supply natural gas for new gas-fired power plants that are replacing retiring coal-fired facilities. In February 2025, Energy Transfer entered into an agreement with CloudBurst to deliver up to 450,000 MMBtu per day of natural gas to support a data center development in Central Texas. Additionally, the company has received connection requests from nearly 200 data centers across 14 states, reflecting strong and growing demand from the digital infrastructure sector. Nearly 90% of Energy Transfer's revenues are derived from fee-based contracts tied to transportation and storage services. These long-term agreements with a stable and creditworthy customer base provide reliable cash flow and significantly reduce exposure to commodity price volatility. With oil and gas production on the rise in the United States, the company is well-positioned to capitalize on the increasing demand for transportation infrastructure. ET Shares More With Unitholders Energy Transfer's current quarterly cash distribution rate is 32.75 cents per Energy Transfer common unit. ET's management has raised distribution rates 14 times in the past five years, and the current payout ratio is 98%. ET's Estimates Moving North The Zacks Consensus Estimate for Energy Transfer's 2025 and 2026 earnings per unit indicates year-over-year growth of 12.5% and 0.49%, respectively. Another firm, Plains All American Pipeline PAA, operating in the midstream space, has extensive assets in the United States. The Zacks Consensus Estimate for Plains All American's 2025 and 2026 earnings per unit indicates a year-over-year decline of 1.32% in 2025 and 0.34% growth in 2026. ET's Units are Trading at a Discount Energy Transfer units are somewhat inexpensive relative to the industry. ET's current trailing 12-month Enterprise Value/Earnings before Interest, Tax, Depreciation and Amortization (EV/EBITDA) is 10.32X compared with the industry average of 11.6X. This indicates that the firm is presently undervalued compared with its industry. Firms operating in this space, like ONEOK Inc. OKE, are trading at an EV/EBITDA of 13.39X, at a premium compared with its industry, while Plains All American Pipeline is trading at a discount of 9.46X. ET Stock Returns Lower Than its Industry Energy Transfer's trailing 12-month return on equity is 11.47%, lower than the industry average of 13.95%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders' funds to generate income. ONEOK's ROE is better than its industry ROE and currently stands at 15.58% Wrapping Up Entergy Transfer, with more than 130,000 miles of pipeline and related infrastructure in 44 states, is poised well to benefit from the improving oil, natural gas and natural gas liquid production volumes in the United States. The firm is presently trading at a discount, and those who have this Zacks Rank #3 (Hold) stock in their portfolio can stay invested and enjoy the regular cash distribution. Yet, as the firm's ROE is lower than the industry, it will be better for the investors to wait a little longer and find a better entry point. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Plains All American Pipeline, L.P. (PAA): Free Stock Analysis Report ONEOK, Inc. (OKE): Free Stock Analysis Report Energy Transfer LP (ET): Free Stock Analysis Report
Reuters
19-05-2025
- Business
- Reuters
US oil producer Continental Resources claims Hess defrauded it out of $69 million
HOUSTON, May 19 (Reuters) - U.S. shale producer Continental Resources has filed a lawsuit against Hess Corp (HES.N), opens new tab alleging that it was defrauded out of up to $69 million through a series of deals the well operator conducted with its subsidiaries. Continental said that Hess, which operates hundreds of wells in North Dakota, artificially inflated midstream service fees by entering into agreements with its own subsidiaries. Net revenues for hydrocarbons from the wells, in which Continental holds a non-operating working interest, were far below market value due to excessive service fees paid to Hess Midstream Partners, the lawsuit said. "Hess Corp has transferred value from its upstream assets to its midstream assets rather than operate with the best interests of non-operating working interest owners in mind," said the lawsuit filed in a federal court in Houston. Hess Bakken Investments, a Hess subsidiary, operates about 483 producing wells in the Williston Basin in which Continental owns a working interest. Continental is based in Oklahoma City, Oklahoma. Hess Corp has a 38% interest in Hess Midstream, which owns oil, gas and produced water handling assets primarily in the Bakken and Three Forks shale plays, Continental said. As a result, Continental said, it and other non-operating working interest owners in those wells bear a larger financial burden than Hess for midstream fees. Continental has been deprived of about $34 million to $69 million of revenue for oil and gas production, the filing said. Hess Midstream's throughput volumes rose 8% for gas processing, 7% for oil terminaling and 9% for water gathering in the first quarter, compared with the year-ago period, mainly due to higher production, the company said in its earnings report last month. Continental Resources said it does not comment on pending litigation. Hess did not immediately respond to requests for comment.
Yahoo
19-05-2025
- Business
- Yahoo
Why I Just Bought This 6.6%-Yielding Dividend Stock and Plan to Buy Even More
Enterprise Products Partners offers a juicy and growing distribution. The midstream leader should deliver solid growth thanks to increasing demand for liquid natural gas. Enterprise's business model is remarkably stable. 10 stocks we like better than Enterprise Products Partners › Many investors came off the sidelines last week after the announcement of a relaxation in trade tensions between the U.S. and China. I was one of them. However, my decision to put some of my money to work had nothing to do with the Trump administration's tariffs. I added to my existing position in Enterprise Products Partners (NYSE: EPD), one of the top midstream energy companies in North America. What's more, I plan to buy even more of this 6.6%-yielding dividend stock. Why am I buying and intend to continue buying Enterprise Products Partners? I've already hinted at the easy answer: the company's juicy distribution. I don't rely on income from my investments yet. However, my goal is to begin transitioning into semi-retirement in a few years. Stocks like Enterprise Products Partners fit well with my long-term investing plans. In the meantime, a 6.6% forward distribution yield provides a great foundation for exceptional total returns. Sometimes, such a high yield can be a yellow flag about potential underlying problems. That's not the case at all with Enterprise Products Partners, though. The limited partnership (LP) has increased its distribution for 26 consecutive years. Enterprise is in solid shape to extend that streak. The LP paid $1.16 billion in distributions to unitholders in the first quarter of 2025. It generated distributable cash flow of $2 billion, up 5% year over year. The midstream energy company's adjusted cash flow from operations payout ratio is 56%, a level that gives Enterprise plenty of flexibility to grow the distribution. There's also a less obvious reason why I'm increasing my stake in Enterprise Products Partners. Some might view any business related to fossil fuels as a lost cause. But Enterprise is poised for solid growth. The demand for liquid natural gas (LNG) in Asia and Europe is projected to increase by around 30% by 2030. Much of that LNG will come from the U.S. because of the low costs. And Enterprise will transport a lot of it with the company's more than 50,000 miles of pipelines. Meanwhile, artificial intelligence (AI) should provide a strong tailwind in the U.S. The data centers that host AI systems are electricity hogs. Importantly, they also must have steady and dependable power. Natural gas is an ideal fuel for power plants supporting these data centers. Admittedly, Enterprise Products Partners isn't likely to deliver jaw-dropping growth. But with its ultra-high yield, it doesn't have to do so to still generate attractive total returns. What else do I really like about Enterprise Products Partners? Its stable business model. I don't think we're out of the woods yet with regards to resurging inflation. The brunt of the tariffs that remain in effect still hasn't been fully felt by Americans. But even if inflation roars back, Enterprise shouldn't be affected very much. Around 90% of its long-term contracts have price escalation provisions built in. What if the U.S. slips into a recession? Again, Enterprise should be in pretty good shape. I suspect the demand for the NGLs that make up 87% of the LP's gross operating margin will hold up relatively well even during an economic decline. History supports my optimism, by the way. Look back at the financial crisis that caused the Great Recession of 2007 through 2009. Enterprise's cash flow per unit held up well. It was a similar story during the oil price collapse that began in 2015 and lasted until 2017. Ditto for the COVID-19 pandemic. The company has also delivered double-digit returns on invested capital every year since 2005. I'm glad I recently bought more units of this well-run midstream leader. I suspect I'll be even happier with my decision a few years from now. Before you buy stock in Enterprise Products Partners, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Enterprise Products Partners wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor's total average return is 975% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Keith Speights has positions in Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy. Why I Just Bought This 6.6%-Yielding Dividend Stock and Plan to Buy Even More was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
