Is Enterprise Product's Growing DCF a Catalyst for Long-Term Gains?

Enterprise Products Partners EPD has continued to showcase the strength of its business model through consistent growth in distributable cash flow (DCF). It is a vital metric for master limited partnerships, as it indicates the cash generated from operations that is available to be distributed to unitholders.

In 2024, the partnership reported a total DCF of $7.8 billion. In contrast, for the 12 months ending June 30, 2025, the DCF increased 4% year over year to $8.1 billion. This upward trend reflects the partnership’s impressive financial discipline, given its history of weathering major economic disruptions like the 2008 financial crisis, the oil price collapse of 2014-2016, and the coronavirus pandemic.

This highlights the stability of EPD’s fee-based infrastructure and its ability to generate reliable cash flows in volatile environments. The increase in DCF has translated into stronger returns for investors, with the second-quarter 2025 distribution rising 3.8% to 54.5 cents per unit from the previous year.

EPD has also deployed $110 million toward unit repurchases in the second quarter, bringing its 12-month total to $309 million. These unitholder-friendly moves are backed by a conservative 57% payout ratio based on adjusted cash flow from operations.

The momentum in DCF signals not just short-term income growth but long-term value creation. The partnership’s record of 27 consecutive years of distribution growth reflects a resilient and dependable income stream, even amid market volatility. For investors, this indicates increasing distributions and capital appreciation through buybacks to deliver dependable returns over the long haul.

Are ET & DKL’s Project Pipelines Driving Growth?

Energy Transfer ET achieved record-breaking results in DCF. Energy Transfer’s DCF rose 10% year over year to a new high of $8.4 billion in 2024. In the first quarter of 2025, the partnership reported DCF attributable to partners of $2.31 billion, underscoring its robust operational and financial performance.

Similarly, Delek Logistics Partners, LP DKL demonstrated a solid cash flow performance. In the fourth quarter of 2024, the partnership posted a DCF of $66.7 million, with an adjusted figure of $69.5 million. It also reported a DCF coverage ratio of 1.13X and an adjusted coverage ratio of 1.17X, both indicating that the partnership’s distributions to unitholders were well-supported by operational cash flows.

In first-quarter 2025, Delek reported an adjusted DCF of $75.1 million compared with $68 million in the first quarter of 2024, reinforcing the strength and sustainability of its cash distributions.

EPD’s Price Performance, Valuation & Estimates

EPD units have gained 10.2% over the past year, outpacing 9.4% growth of the composite stocks belonging to the industry.

From a valuation standpoint, EPD trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.17X. This is below the broader industry average of 11.63X.

The Zacks Consensus Estimate for EPD’s 2025 earnings has been revised downward over the past 30 days.

EPD currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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