EnLink Midstream Partners (ENLK) has traded on its own for a short time, but it has already built itself a reputation as an impressive dividend stock.
It has a nearly 9% dividend yield, which towers above the average dividend yield in the stock market. EnLink is one of 295 stocks with a 5%+ dividend yield.
Even among high-yielding stocks, EnLink’s dividend stands out.
EnLink was established in 2014, when Crosstex Energy and Devon Energy (DVN) combined assets to form a midstream energy giant.
There are actually two ways to invest in this company. One is by purchasing shares of EnLink Midstream, LLC (ENLC), the General Partner. There is also EnLink Midstream Partners, which is the MLP.
ENLK has a much higher yield, more than 300 basis points above ENLC.
This article will discuss why EnLink Midstream Partners could be a valuable addition to an income investor’s portfolio.
Business Overview
EnLink is a midstream oil and gas company. It operates storage and transportation assets including pipelines and storage facilities, across natural gas, crude oil, condensate, and natural gas liquids.
One benefit of the midstream business model is that it is somewhat protected against falling commodity prices. Midstream operators are paid fees based on volumes transported through their assets.
As a result, they are not highly reliant on the price of oil and gas, although they do still carry some exposure.
EnLink has a fairly large network of assets, including 11,000 miles of pipeline, 20 processing facilities, and 7 fractionators.
Source: Q1 Earnings Presentation, page 22
Its assets have 260,000 barrels per day of fractionation capacity, 130,000 barrels per day of NGL pipeline capacity, and 4.5 billion cubic feet per day of gas processing capacity.
EnLink’s assets are concentrated primarily in four U.S. oil and gas fields: the Midland & Delaware Basin, Central Oklahoma, Louisiana, and North Texas.
These assets have served the company well. In 2016, the company posted impressive growth across several key operating metrics.
