This 7%-yielding dividend stock has the fuel to grow its payout through 2026.

Enterprise product partners (NYSE: EPD) and MPLX (NYSE: MPLX) offer investors the best of both worlds. Master Limited Partnerships (MLPs) pay monstrous distributions (both currently yield more than 7%). They also have was able to grow their earnings and payouts at healthy rates for years.

The MLPs They currently have enough commercially-guaranteed organic expansion projects under construction to grow their cash flow through 2026. This should provide them with enough fuel to continue growing their high-yield payouts.

$6.7 billion in fuel to keep growing

Enterprise Products Partners was a distribution growth machine. MLP has has increased his pay for 26 consecutive yearsevery year since it went public. It increased its payout at a compound annual rate of 7% by investing in expanding its portfolio of stable mid-cap assets with acquisitions and organic expansions.

The company currently has $6.7 billion in major capital projects under construction. These include additional natural gas processing capacity, pipeline expansion and several export capacity projects. Its current slate of projects should be online by the end of 2026. This gives the MLP plenty of visibility into its ability to grow its cash flow and distribution over the next few years.

Enterprise Products partners can easily fund this growth. It has a low distribution payout ratio consisting of 55% of its adjusted cash flow from operations and a low leverage ratio of 3.0. That gives him a lot of flexibility to finance his current slate of capital projects and make new investments as opportunities arise.

MLPs are working to improve their growth prospects. It recently agreed to buy Pinon Midstream in a highly lucrative deal for $950 million. The acquisition will be accretive to its cash flow per share next year, with additional upside due to business synergies and future expansion potential. It is also tracked more additional growth opportunities, including new gathering pipelines, more export capacity and other expansion projects. Securing these projects and making additional acquisitions could expand the growth prospects even further in the future.

His partnerships are paying off DIVIDENDS

MPLX has increased its distribution every year since it went public more than a decade ago. Since 2020, it has grown its payout at a compound annual rate of 7.3%, including 10% in each of the last two years. Fueling this growth has been a combination of organic expansion projects and acquisitions, which have contributed to a 7.7% compound annual growth rate of its distributable cash flow over the past several years.

MLP should continue to grow at a healthy pace in the next few years. It is part of a joint venture (JV) that recently agreed to build the Blackcomb Pipeline, which is expected to become operational in the second half of 2026. The same JV. format to help finance the construction of the Rio Bravo Pipeline Project, which should also be operational in 2026. MPLX has several other expansion projects on the right track to enter service in the next two years.

These projects give it a lot of visibility into its ability to grow its free cash flow. In the meantime, he has enough financial flexibility to finance his current slate of projects and new investment opportunities, including increased acquisitions. The second quarter has ended with $2.5 billion in cash and a low leverage ratio of 3.4x. That’s after they made several acquisitions this year, including buying an additional 20% stake in the BANGL pipeline, which they are currently expanding, and spending $625 million to buy existing joint ventures and a gas collection system. dry gases. Future incremental acquisitions and high yield expansions could further enhance and expand its ability to grow its distribution.

Sufficient fuel to continue increasing its high yield distributions

Enterprise Products Partners and MPLX increased their distributions every year since they became public. These trends look set to continue at least through 2026, considering the expansion projects they have going down the pipe. They are great options for those looking for a profitable and steadily growing stream of passive income and are comfortable receiving a Schedule K-1 Federal Tax Form every year.

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Matt DiLallo has positions in Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

These 7%-yielding dividend stocks have the fuel to grow their payouts through 2026, was originally published by The Motley Fool