All It Takes Is $5,000 Invested in Enterprise Products Partners (EPD) to Generate $300 in Annual Passive Income
Come for the yield, stay for the over two decades of distribution growth.
In 2025, the S&P 500 (^GSPC +0.60%) experienced a notable 16.4% increase, and its momentum has continued into the current year, surging more than 11.3% since January. While this market rally has been impressive for investors, market experts acknowledge that prolonged bull runs often precede corrections. In light of this, many are seeking stable dividend-paying stocks to bolster their passive income during potential market downturns.
One such consideration is Enterprise Products Partners (EPD +0.46%), a midstream specialist operating as a master limited partnership (MLP). This structure allows EPD to distribute capital to investors through quarterly cash distributions, currently offering a competitive 6% forward yield, which translates to approximately $302 in annual passive income from a $5,000 investment.
Investors should be aware that MLPs can present complex K-1s, potentially leading to additional state tax returns and delayed tax filings, as MLPs typically issue K-1s in mid-March. Operating an extensive pipeline infrastructure, comprising over 50,000 miles of pipeline, EPD transports crude oil, natural gas, and other commodities across the United States.
Additionally, EPD manages 19 gas processing plants, 21 deepwater docks, and various other energy assets. With over $6.5 billion worth of major projects in development, the company demonstrates a strong commitment to growth. Over the past decade, EPD has maintained an average return on invested capital of 12%, underscoring its dedication to rewarding shareholders.
The stock's 6% yield may initially attract attention, but it is the company's consistent track record of increasing distributions for 28 consecutive years that truly sets EPD apart as a reliable source of passive income. Although EPD's stock trades at a 8.7 multiple of operating cash flow, slightly above its five-year average of 7.8, the potential for a robust passive income stream makes this investment worthy of further consideration.
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