New Trade for May 16th, 2023

Stocks were little changed this morning as market participants anxiously awaited progress on a deal to raise the debt ceiling.  Treasury Secretary Janet Yelen said last week that a lack of a deal could spur an “economic catastrophe,” as the U.S. faces the possibility of default as early as June 1. 

The price of Oil has come down significantly recently and is currently hovering around $71 per barrel.  This latest pullback is creating an undeniable opportunity for investors looking to boost passive income with a position in one of the best high yield stocks available.  Thanks to accelerating distribution growth, this company is well-positioned to continue delivering market-crushing returns alongside a very low risk profile.   

Enterprise Product Partners (EPD) 

Enterprise Product Partners’ conservatively positioned balance sheet, high yield and accelerating distribution growth make the stock a compelling opportunity amid plunging oil prices. 

The solid demand for the midstream energy company’s services and geographically diversified assets enable the company to consistently grow its EBITDA and cash flows to support its hefty dividend yield.  Its adjusted EBITDA has increased at a CAGR of 10.6% since 2017. Meanwhile, its adjusted free cash flow per unit had a CAGR of 32% during the same period. 

While many peers such as Energy Transfer (ET), Kinder Morgan (KMI) have slashed their payouts in the past during energy market declines, EPD has continued to grow its dividend year after year for a quarter century at a CAGR of 7%. Currently, EPD’s dividend yield stands at around 8% and is highly likely to continue to climb over the long term.

[stock_market_widget type=”accordion” template=”extended” color=”#5679FF” assets=”EPD” start_expanded=”true” display_currency_symbol=”true” api=”yf”]