Enterprise Products Partners (EPD -0.88%) and Enbridge (ENB +0.39%) are two of the most-followed pipeline stocks. Both names also sport similar forward dividend yields, with Enterprise Products Partners yielding 5.9%, and Enbridge yielding around 5.8%. Both stocks also have similar track records of dividend growth, having hiked their payouts annually for around three decades.
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That might make you think: What’s the difference? Same industry, similar yields, similar growth streaks, similar stocks, right? Not so fast. Taking other factors into account, Enterprise Products Partners looks like the stronger choice, at least when it comes to what matters most for dividend investors.
Why Enterprise Products Partners has the edge
Both of these energy stocks may have similar dividend yields, but they don’t have similar levels of dividend coverage. Enterprise Products Partners measures its dividend coverage by using a metric called cash flow from operations (CFFO). The master limited partnership (MLP) then divides its trailing 12-month distributions and buybacks by that figure. As of Q3, this figure stood at around 54%.
EPD – Enterprise Products Partners
$38.15-$0.34 (-0.88%)
NYSE · As of 4:00 PM ET 10/30/26
For comparison, Enbridge, as discussed in its Q2 2026 earnings presentation, is currently expecting to use between 60% and 70% of its discretionary cash flow (DCF) for distributions. As this represents a slightly higher payout ratio, Enterprise has the edge in terms of dividend coverage.
EPD – Enterprise Products Partners
$38.15-$0.34 (-0.88%)
NYSE · As of 4:00 PM ET 10/30/26
That’s not all. When it comes to another key metric, debt-to-EBITDA, Enterprise stands out as the less leveraged, and thus less risky, choice. Enterprise has a debt-to-EBITDA ratio of around 2.9, whereas Enbridge guides to maintain a debt-to-EBITDA ratio in the 4.5 to 5 range.
Sure, MLPs issue K-1s each year, which can make owning them more complicated tax-wise, but consider that Enbridge is a corporation and therefore pays dividends from its after-tax earnings. As a Canadian company, it is subject to withholding tax on dividends paid to U.S.-based investors.
Where Enbridge stands out
Based on the above-mentioned metrics, Enterprise Products Partners offers the stronger combination of dividend safety and tax efficiency. Still, consider the following. First, we already have Enterprise’s Q3 results. Enbridge doesn’t report its Q3 2026 results until next week. That said, it’s not as if Enbridge’s leverage and payout ratios are likely to be dramatically different from those the company reported last quarter.
Second, Enbridge isn’t only a pipeline company. It’s also North America’s largest natural gas utility, owning several regulated natural gas utilities across the U.S. and Canada. This gives it less overall cash flow volatility than pure-play midstream stocks.
Beyond these strengths, keep in mind that these positives are subject to change. For Enterprise Products Partners, keep an eye on its leverage and dividend coverage ratios. If these become less favorable, Enbridge could become the better buy among midstream high-yield dividend stocks.
Still, for income investors seeking dividend safety and durability, Enterprise Products Partners remains the stronger choice. Make no mistake, in relation to stocks overall, Enbridge scores strongly in these areas, but compared to each other, Enterprise Products Partners has the edge.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
