1 High Yield High Dividend Stock I'd Buy Without Hesitation In December

Enterprise Products Partners expects to complete $6 billion of growth capital projects during the back half of this year.
MLP growth capital expenditures will decrease significantly in 2026.
It could produce substantially more free cash flow in the coming year.
10 stocks we like better than Enterprise Products Partners ›

Enterprise Products Partners (NYSE: EPD) it has been an elite income investment over the years. The master limited liability partnership (MLP) has woke up its distribution payment for 27 years in a row. It currently offers a monster 6.7% yield, several times higher than the S&P 500 (yield 1.2%).

The middle giant is on the point of a major inflection point. That next catalyst is why I buy the MLP without hesitation this December.

Image source: Getty Images.

Enterprise Products Partners has launched a multi-year capital project investment cycle in 2022. The midstream giant has built several on a large scale pipeline and marine terminal facilities over the past few years. In addition, it has made a few acquisitions to expand its midstream footprint into new areas. As a result, it has the infrastructure to support growing production volumes in the Permian and Haynesville basins for many years to come.

This year marked the peak in capital spending. Enterprise Products Partners is on track to invest $4.5 billion in growth capital projects this year, up from $3.9 billion last year and $2.9 billion in 2023. That spending allowed the company to complete several large-scale capital projects, including its new Neches River Terminal and the Bahia natural gas liquids pipeline. Overall, the company anticipates finishing $6 billion of growth capital projects during the second half of this year.

Enterprise Products Partners expects its growth capital spending to drop substantially next year. At the end of the third quarter, the MLP anticipated that its growth capital expenditures in 2026 would be between $2.2 billion and $2.5 billion. This will allow the company to close construction on the second phase of its Neches River terminal, build two additional gas processing plants, and expand the Enterprise Hydrocarbons Terminal. While the company has since approved an expansion of the Bahia pipeline as part of a joint venture with ExxonMobilhis new partner is contributing cash to the venture, helping to offset the cost of the expansion.

Enterprise Products Partners is about to begin an exciting new chapter. The $6 billion of growth capital projects entering service in the second half of this year will contribute significant incremental cash flow over the coming quarters as they increase their volumes. In addition, the company’s capital expenditure will decrease substantially next year. With its cash flow increasing and its capital expenditures decreasing, Enterprise Products Partners’ free cash flow should increase in 2026.

The MLP will no doubt use some of the increasing free cash flow to increase its distribution. Enterprise Products Partners currently produces enough cash flow to cover its payout at a comfortable 1.5 times. She is too she has the strongest balance sheet in the midstream, low-end sector 3.3 times leverage ratio. This gives it a lot of flexibility to raise the fee, which has increased by 3.8% over the past year. The MLP could provide investors with a sizeable pay bump in 2026 or grow the distribution at a higher rate over the next few years.

In addition, Enterprise Products Partners anticipates repurchasing more of its units. The MLP recently boosted its unit repurchase authorization from $2 billion to $5 billion. After repurchasing $80 million of its units in the third quarter, the company has about $3.6 billion remaining on the new authorization. It can increase the repurchase rate or opportunistically buy more units during a market downturn.

Enterprise Products Partners she has a lot momentum is heading towards 2026. Its free cash flow is on track to increase, which will give it more money to return to investors. This could give it the fuel to produce strong total returns in the coming year. This high-octane total return potential makes the MLP look like an attractive investment opportunity in December for those comfortable receiving the Schedule K-1 Federal Tax Form send every year.

Before you buy stock in Enterprise Products Partners, consider this:

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Matt DiLallo holds positions at Enterprise Product Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

1 Top High-Yield Dividend Stocks I’d Buy Without Hesitation In December was originally published by The Motley Fool

1 High Yield High Dividend Stock I’d Buy Without Hesitation In December

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