Navigating Economic Cycles with Midstream MLPs: Two Essential Infrastructure Assets with Robust Distributions
Investing in essential infrastructure assets can be a smart move, especially during uncertain economic times. Midstream Master Limited Partnerships (MLPs), which focus on the transportation, storage, and processing of natural resources, offer consistent revenues that are largely insulated from economic cycles. Let’s explore two midstream MLPs with growing distributions and yields up to 8.5%.
Enterprise Product Partners LP (EPD)
Enterprise Product Partners LP (EPD) is a Houston-based midstream company that owns and operates a diversified portfolio of natural gas liquids (NGL) and crude oil infrastructure. EPD’s assets include pipelines, terminals, and processing facilities, which provide essential services to producers and consumers.
EPD’s business model is based on fee-based contracts, which generate stable, predictable cash flows. These contracts are typically tied to the production volumes of its customers, providing an automatic inflation hedge. EPD’s distribution growth is supported by its extensive backlog of growth projects, which are expected to deliver significant cash flows.
Plains All American Pipeline, L.P. (PAA)
Plains All American Pipeline, L.P. (PAA) is a leading independent midstream energy infrastructure company based in Houston. PAA’s assets include crude oil, natural gas liquids, and natural gas pipelines, terminals, and storage facilities.
Like EPD, PAA’s business model is based on fee-based contracts, which provide stable, predictable cash flows. PAA’s growth is driven by its extensive backlog of growth projects, including the Cactus II pipeline, which will transport crude oil from the Permian Basin to the Gulf Coast. This project is expected to generate significant cash flows and support distribution growth.
What Does This Mean for You as an Investor?
Investing in midstream MLPs like EPD and PAA can provide several benefits. Their essential infrastructure assets generate consistent revenues that are largely insulated from economic cycles. Their fee-based business models provide automatic inflation hedges, which can help protect your purchasing power over time. Additionally, their growing distributions can provide a steady stream of income for investors.
The Impact on the World
Midstream MLPs like EPD and PAA play a critical role in the energy industry by providing essential infrastructure services that enable the transportation and processing of natural resources. Their stable, predictable cash flows help ensure a reliable energy supply chain, which is crucial for economic growth and energy security. Furthermore, their investments in new infrastructure projects can create jobs and contribute to economic development.
Conclusion
Midstream MLPs like Enterprise Product Partners LP and Plains All American Pipeline, L.P. offer investors essential infrastructure assets with inflation-protected, resilient cash flows and steady demand. Their fee-based business models provide stable, predictable cash flows that are largely insulated from economic cycles. As investors navigate uncertain economic times, midstream MLPs can provide a steady stream of income and help protect purchasing power over time.
- Enterprise Product Partners LP (EPD) is a Houston-based midstream company with a diversified portfolio of natural gas liquids (NGL) and crude oil infrastructure.
- EPD’s business model is based on fee-based contracts, providing stable, predictable cash flows and an automatic inflation hedge.
- Plains All American Pipeline, L.P. (PAA) is a leading independent midstream energy infrastructure company with a portfolio of crude oil, natural gas liquids, and natural gas pipelines, terminals, and storage facilities.
- PAA’s business model is also based on fee-based contracts, providing stable, predictable cash flows and an automatic inflation hedge.
- Investing in midstream MLPs can provide consistent revenues, inflation protection, and a steady stream of income.
- Midstream MLPs play a critical role in the energy industry by providing essential infrastructure services that enable the transportation and processing of natural resources.
