MPLX and Enterprise Products Partners Comparison for Higher Dividend Yields
In the realm of Master Limited Partnerships (MLPs), two standout names are MPLX and Enterprise Products Partners (EPD). Both companies operate large, integrated energy midstream assets, offering attractive dividend yields and growth prospects. However, between the two, the better buy for dividend income and higher returns through the end of the decade depends on balancing yield, dividend growth, financial health, and growth prospects.
### Dividend Yield & Income Stability
EPD currently offers a 6.68% dividend yield with a very stable, uninterrupted payout track record since 1998. Its dividend payout ratio based on cash flow is around 54.56%, suggesting sustainable distributions. EPD has a moderate dividend growth rate of about 3.74% annually over the past three years, and it benefits from a diversified customer base, long-term fixed-fee contracts, and a solid BBB+ credit rating, underpinning its income reliability.
MPLX, on the other hand, offers a slightly higher forward yield, around 7.4%. It has demonstrated double-digit dividend growth recently, including a 12.5% increase in 2024, and an expected distribution coverage ratio of 1.5x, indicating strong cash flow support for dividends. MPLX has a leverage ratio of about 3.3, showing prudent balance sheet management.
### Growth Profile
MPLX is pursuing a more aggressive growth strategy, doubling growth capital expenditure from $889 million in 2024 to $1.7 billion in 2025, focusing on natural gas and NGL infrastructure to support rising export demand and emerging needs such as AI infrastructure power. It is expanding its footprint strategically, including partnerships and pipeline acquisitions, positioning it for higher growth potential.
EPD grows more modestly but steadily, relying on its diversified midstream services across natural gas, crude oil, refined products, and petrochemicals, and its long-term contracts provide stability but limit rapid growth.
### Valuation & Risk
MPLX trades at an attractive forward EV-to-EBITDA ratio just above 10, which is reasonable for its growth profile. EPD offers a blue-chip defensive profile with a large market presence and historically reliable dividends but slower growth.
### Summary Comparison
| Factor | Enterprise Products Partners (EPD) | MPLX | |------------------------|-----------------------------------------------|---------------------------------------| | Dividend Yield | ~6.68% | ~7.4% | | Dividend Growth Rate | Moderate (~3.7% annually recent years) | High (double-digit growth recently) | | Dividend Safety | Very safe; 28+ years uninterrupted payout | Safe; distribution coverage 1.5x | | Financial Health | BBB+ credit rating; payout ratio moderate | Leverage 3.3; strong coverage ratio | | Growth Prospects | Modest, stable growth | Aggressive capex growth, expansion | | Valuation | Reasonable for stability | Attractive EV/EBITDA valuation |
### Conclusion
For safer, steady dividend income with modest growth, EPD stands out due to its long track record, stable cash flows, and strong credit profile. For higher income now and stronger dividend growth potential through aggressive reinvestment and expansion, MPLX is a better buy, offering a higher yield and growth outlook supported by good financial health.
If your goal is maximizing dividend income plus capital appreciation through the decade with moderate risk, MPLX likely offers superior total returns due to its growth investments and higher yield. For conservative, reliable income with lower volatility, EPD is preferable. Your ultimate choice depends on your risk tolerance and income growth preferences.
In the first quarter, MPLX generated $1.5 billion of distributable cash flow, an 8.5% increase. Enterprise Products Partners has a leverage ratio of 3.1, backing its strong A-/A3 bond ratings, the highest in the energy midstream sector. The MLPs generate stable cash flow and pay lucrative and steadily growing distributions.
Enterprise Products Partners' expansion projects include gas processing plants, pipeline expansions, a natural gas liquids (NGL) fractionator, and several export terminal expansions. The Traverse Pipeline, Blackcomb and Rio Bravo Pipelines, a liquefied petroleum gas export terminal with ONEOK, and two NGL fractionators for Marathon Petroleum are among the projects MPLX is building.
Enterprise Products Partners has raised its distribution for 26 straight years, including a 3.9% increase last year. Enterprise Products Partners expects these projects to enter commercial service by the end of next year, driving cash flow growth through 2027. Enterprise Products Partners' payout is covered 1.7 times, while MPLX's payout is covered about 1.5 times.
MPLX's current investment plans would see its growth capital spending decline from a range of $4 billion to $4.5 billion this year to between $2 billion and $2.5 billion in 2026. Enterprise Products Partners has $7.6 billion of major capital projects under construction. Enterprise Products Partners and MPLX have two of the best records of distribution growth in the sector. In the first quarter, Enterprise Products Partners produced $2 billion of distributable cash flow, up 5% year over year.
In the realm of investment decisions in the energy midstream sector, the choice between MPLX and Enterprise Products Partners (EPD) for dividend income and growth prospects hinges on balancing yield, dividend growth, financial health, and growth prospects.
If you prioritize safety and a steady dividend income, EPD might be a preferable choice due to its uninterrupted payout track record since 1998, moderate dividend growth rate, solid BBB+ credit rating, and large market presence.
However, MPLX offers a slightly higher forward yield and higher potential dividend growth, having demonstrated double-digit growth recently and an expected distribution coverage ratio of 1.5x. Its aggressive growth strategy, focusing on natural gas and NGL infrastructure, presents higher growth potential.
Ultimately, your investment decision should reflect your risk tolerance and income growth preferences. If you aim for maximizing dividend income plus capital appreciation with moderate risk, MPLX may offer superior total returns. For conservative, reliable income with lower volatility, EPD might be a more suitable option.
