Slow and steadyĮnterprise is not an exciting name. So Enterprise appears fairly well-positioned as the world moves in a cleaner direction. Second, Enterprise has positioned itself as a major player in the natural gas space, a fuel which is expected to help support the world's shift toward cleaner alternatives. That's important today, because it is getting increasingly difficult to get approval to build major oil and natural gas assets.

That's normal for this conservatively run midstream giant, and gives it even more financial flexibility in times of uncertainty.įirst, Enterprise's size makes it an ideal consolidator in the midstream space. The partnership's financial debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio is just 3.5 times, and at the low end of its peer group. On top of that, Enterprise has long focused on maintaining a strong balance sheet. The partnership's distributable cash flows were way above what was needed to pay the distribution, affording investors a great deal of income security even if Enterprise faces some adversity.ĮPD Financial Debt to EBITDA (TTM) data by YCharts That core is good, but the real number that should interest investors is the first-quarter 2022 distribution coverage ratio of 1.8 times. Enterprise, with a $60 billion market cap, happens to be one of the largest and most diversified midstream players in North America.

Essentially, companies like Enterprise charge fees to energy companies as they move oil and natural gas through its systems of pipes, storage, processing, and transportation assets. However, the midstream niche, which is Enterprise's focus, operates a little differently. The energy industry is highly cyclical, with oil and natural gas prices often moving higher and lower in dramatic fashion. Right now, while investors are bidding up the shares of oil and gas producers because of a commodity rally, you might want to step back and consider the merits of Enterprise's hefty 6.7% yield and slightly more boring business model. In fact, its business, moving oil and natural gas, tends to hold up well regardless of whether or not oil prices are high or low. Enterprise Products Partners ( EPD -0.25%) is not your typical oil and natural gas stock.

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