When it comes to investing in the energy sector, two MLPs that often come up in discussions are Energy Transfer and Enterprise Partners. Both companies have a strong presence in the midstream sector, which involves the transportation and storage of oil and gas. But which MLP is better for investors? Let’s take a closer look.
Energy Transfer
Energy Transfer is one of the largest midstream companies in the United States, with a market capitalization of over $30 billion. The company operates a vast network of pipelines, terminals, and storage facilities that transport and store natural gas, crude oil, and refined products. Energy Transfer also has a significant presence in the propane and NGL (natural gas liquids) markets.
One of the strengths of Energy Transfer is its diversified asset base. The company has a presence in multiple regions, including the Permian Basin, the Marcellus and Utica shale plays, and the Gulf Coast. This diversification helps to mitigate the risk of any one region experiencing a downturn.
Energy Transfer also has a strong track record of growth. The company has completed several major acquisitions in recent years, including the purchase of Sunoco Logistics and the merger with Regency Energy Partners. These acquisitions have helped to expand Energy Transfer’s footprint and increase its cash flow.
Enterprise Partners
Enterprise Partners is another major player in the midstream sector, with a market capitalization of over $50 billion. The company operates a vast network of pipelines, terminals, and storage facilities that transport and store natural gas, crude oil, and refined products. Enterprise Partners also has a significant presence in the NGL market.
One of the strengths of Enterprise Partners is its focus on fee-based businesses. The company generates the majority of its revenue from long-term contracts with customers, which provides a stable source of cash flow. Enterprise Partners also has a strong balance sheet, with a low debt-to-equity ratio and a solid credit rating.
Enterprise Partners has a history of consistent dividend growth. The company has increased its dividend for 22 consecutive years, which is a testament to its financial strength and commitment to returning value to shareholders.
Which MLP is Better?
Both Energy Transfer and Enterprise Partners have their strengths and weaknesses, and the choice ultimately depends on an investor’s individual goals and risk tolerance. Energy Transfer may be a better choice for investors seeking growth, as the company has a track record of completing major acquisitions and expanding its asset base. Enterprise Partners may be a better choice for investors seeking income, as the company has a history of consistent dividend growth and a focus on fee-based businesses.
In conclusion, both Energy Transfer and Enterprise Partners are strong MLPs that offer investors exposure to the midstream sector. Investors should carefully consider their individual goals and risk tolerance before making a decision on which MLP to invest in.