Partner for corporate products (EPD 0.31%) is an elite dividend stock. The Master Limited Partnership (MLP) has increased its cash distribution to investors for 26 consecutive yearsincluding by 5% last year. This payout at the moment Returns of over 7%, well above the S&P500 on average less than 1.5%.

The MLP should have enough fuel to continue to increase its payouts in the future. The company recently agreed to spend $950 million on an acquisition to even more fuel for the dividend growth engine.

Filling the tank

Enterprise Products Partners recently announced that it is acquiring Pinon Midstream for $950 million in cash. Pinon Midstream provides natural gas gathering and processing services on the Delaware Basin side of the Permian. The company operates 50 miles of gas gathering and transmission pipelines, five compressor stations, and 270 million cubic feet per day (MMcf/d) of hydrogen sulfide and carbon dioxide processing facilities. These assets generate predictable cash flow secured by long-term, fee-based contracts.

Pinon Midstream also offers MLP visible growth potential. The company is currently working to expand its processing capacity to 450 MMcf/d, which is expected to come on stream in the second half of next year. Enterprise also sees the potential to develop a third injection well that could support a total processing capacity of up to 750 MMcf/d.

Enterprise is excited about this deal. Co-CEO Jim Teague commented on the acquisition in a press release. He stated:

We believe that the Piñon management team has developed the best system for treating sour natural gas in the Delaware Basin. These assets accelerate our entry into this region by at least three to four years. These assets are highly complementary to our midstream energy system and provide us a An excellent entry point into the eastern flank of the Delaware Basin for the expansion of our natural gas processing activities. Our contribution offers producers A Selection for reliable and value-added processing services.

The acquisition will also be very accretive to MLP’s cash flow, with Enterprise expecting it to be accretive to $0.03 per share next year. and that is without any benefit from the expected commercial and operational synergies. This will provide the Company with more cash flow to expand its sales in 2025 and beyond.

Many growth drivers

The acquisition of Pinon reinforces Enterprise Products Partners’ already strong growth profile. The MLP currently has $6.7 billion worth of expansion projects under construction, scheduled for completion by the end of 2026. These include new natural gas processing facilities, pipeline expansions and additional export capacity. These projects provide a lot of insight into the company’s future cash flow growth and its ability to return more capital to investors.

MLP has several other organic expansion projects under development. These include major projects such as the Sea Port Oil Terminal, additional processing and export capacity and pipeline expansions. The company also evaluates Opportunities to reduce carbon emissions, such as Carbon capture and storage.

Enterprise Products Partners also has the financial flexibility to make further acquisitions. The company has the highest credit rating in the midstream sector and a low 3.0x Gearing ratio, it offers better access to low-cost capital to complete value-added deals. The acquisition of Pinon is the company’s second notable transaction this year. Enterprise also spent $400 million to purchase several joint venture interests in Western Midstream Partners.

A well-oiled income machine

Enterprise Products Partners has a long history of growing its profitable distribution business. The company has a knack for accretive acquisitions and investing in high-yield capital projects to drive growth. The Pinon deal will further enhance the company’s already strong growth prospects, which should give this MLP even more impetus to increase its distributions in the future. So if You want to generate a steadily increasing stream of passive income (and are happy to Schedule K-1 Federal Tax Form every year), Enterprise Products Partners is a fantastic option.