This elite dividend stock is adding $400 million of fuel to its dividend growth engine.

Enterprise Product Partner (EPD 0.36%) Last year, we set a milestone of increasing distribution for 25 consecutive years. This is the best growth record, especially in the volatile energy sector.

that much master limited partnership (MLP) has steadily grown its distribution by building and purchasing stable midstream assets that increase cash flow. The company recently agreed to a $400 million acquisition. These transactions will provide further fuel to grow the 7.5% yield distribution going forward.

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Enterprise Products Partners recently signed a series of agreements with fellow MLPs. Western Midstream Partner (WES 0.54%) Acquire additional interests in select midstream assets. You are acquiring:

• Western’s 20% interest in Whitethorn Pipeline Company. The company owns the Midland-to-Sealy portion of Midland-ECHO 1 crude oil with a capacity of 620,000 barrels per day. pipeline. The transaction gives Enterprise 100% ownership of Whitethorn.
• Western holds a 25% interest in Enterprise EF78, which owns natural gas liquids (NGL) fractionators 7 and 8 in Mont Belvieu, Texas. Enterprise now owns 100% of EF78.
• Western’s 15% interest in Panola Pipeline Company. The company owns 253 miles of pipelines that transport NGLs from natural gas processing plants in East Texas to multiple destinations, including Enterprise’s NGL fractionation complex in Chambers County, Texas. The company will own 70% of Panola upon closing of the transaction.

The MLP paid $375 million for its stake in Whitethorn and EF78, which had already closed. It agreed to pay Panola $25 million in interest, which would close in 45 days. The company is financing the acquisition with cash on hand and short-term borrowings.

“We are pleased to have completed these transactions to consolidate our ownership of our midstream assets,” co-CEO Jim Teague said in a press release announcing the first two acquisitions. He added, “Pipeline assets serve the prolific Permian Basin and fractionation assets are essential to our NGL system. These transactions are immediately accretive to Enterprise’s distributable cash flow per unit.” . Incremental cash flow per share will provide the MLP with more funds to support increased distributions in the future.

Meanwhile, the deal allows Western Midstream to monetize some non-core assets. By simplifying their portfolios and strengthening their balance sheets, MLPs will become more attractive acquisition targets. The company’s parent company; Occidental Petroleumam It is reportedly looking to sell its nearly 50% stake in the MLP..

More fuel in the pipeline

Acquisitions are only part of Enterprise Products Partners’ growth story. MLPs also have a long history of investing in organic expansion projects to increase cash flow. The company currently has $6.8 billion of approved capital projects under construction. These projects include a new gas processing plant, another NGL pipeline, a 14th fractionator and additional export capacity.

The company expects to invest between $3.25 billion and $3.75 billion in projects this year (of which $3.25 billion has already been approved and up to $500 million is currently in development). Meanwhile, it is expected to invest $3 billion in approved capital projects next year. Project Slate is currently scheduled to enter service by the first half of 2026. This gives you a lot of visibility into future cash flows and distribution growth.

MLP is developing several additional projects, ranging from small-scale natural gas gathering expansions to larger projects such as the SPOT marine export terminal and carbon capture and sequestration opportunities. The company’s ability to approve additional expansion projects will add more visibility to its long-term cash flow growth profile while providing more fuel to increase distributions in the future.

A well-oiled income-generating machine

Enterprise Products Partners has a long history of building and purchasing revenue-generating midstream assets. Our ability to grow our portfolio has allowed us to consistently increase our high-yield distributions. With another $400 million in acquisitions secured and a $6.8 billion expansion project underway, the MLP should have plenty of fuel to keep growing its dividend going forward. This makes a great investment for people who want a steadily growing income stream.