Better Dividend Stock: Enterprise Products vs. Plains All American

Key Takeaways

• Plains All American Pipeline yields 6.9% at its current distribution rate, against 6.1% for Enterprise Products Partners.
• Both covered their fiscal 2025 distributions 1.7x with distributable cash flow. Fiscal 2026 consensus has Enterprise’s coverage rising to 1.9x while Plains’ holds at 1.7x.
• Plains cut its distribution from $2.50 a unit in fiscal 2016 to $0.72 in fiscal 2020 and has raised it in each of the last four fiscal years. Enterprise says it’s on track for 28 straight years of growth in 2026.
• Over the last twelve months, Enterprise’s EBIT covered its interest 5.0x, against 2.6x for Plains, though Plains carries less net debt against EBITDA.

Enterprise Products Partners (EPD) posted record operational distributable cash flow of $2.3 billion in the second quarter of 2026. That was up 21% from a year earlier and enough to cover its distribution 1.9x.

Eight days later, Plains All American Pipeline (PAA) raised its forecast for Permian production growth in 2026 to 100,000 to 200,000 barrels a day, exit to exit.

For income investors, the payouts are what count. Plains yields 6.9% at its current rate, and Enterprise yields 6.1%. Both pay distributions on units and send a K-1 at tax time. Both are judged on distributable cash flow coverage, which leaves out the growth projects they choose to build.

So which is the better dividend stock?

Enterprise: 28 years and counting

Enterprise’s distribution grew 4.0% a year from fiscal 2020 to fiscal 2025, from $1.78 to $2.17 a unit, and it now runs at $2.24 a year. Management says it’s “on track for 28 consecutive years of distribution growth in 2026.” It calls that the longest run of any U.S. midstream company it knows of.

Its policy is for distributions to “grow commensurate with operational distributable cash flow per unit growth.” The record holds it to that: coverage stayed between 1.63x and 1.84x every year from fiscal 2020 to fiscal 2025.

Fiscal 2026 consensus has distributable cash flow per unit up 16%, from $3.66 to $4.24. That would lift coverage to a wide 1.89x.

The second-quarter results show where the gain comes from:

• Pipeline volumes hit a record, up 8% from a year earlier.
• Marine terminal volumes rose 33%, on international demand for U.S. energy and new assets like the Neches River terminal expansion.

Last year’s final consensus landed within 1% of the actual.

The cost is spending. Growth capex is set at $2.9 billion to $3.4 billion in 2026, net of asset sales, with about $3 billion expected in 2027.

Plains: a bigger check, rebuilt from a cut

Plains’ last decade looks nothing like Enterprise’s steady climb. It cut its distribution from $2.50 a unit in fiscal 2016 to $0.72 in fiscal 2020. So its 16.7% a year from fiscal 2020 to fiscal 2025 is a rebound off that low.

On its August call, management named its first priority: to “return cash to unitholders through our targeted $0.15 per unit annual increases.” Fiscal 2026 consensus has $1.71 a unit, $0.15 above fiscal 2025’s $1.56.

Those raises have spent the cushion the cut left behind. The distribution more than doubled, from $0.72 a unit in fiscal 2020 to $1.56 in fiscal 2025. Over the same years, distributable cash flow per unit rose only from $2.31 to $2.61. So coverage fell every year, from 3.21x to 1.67x.

Fiscal 2026 consensus holds coverage at 1.68x, with distributable cash flow per unit up 10% to $2.87. Management points to two reasons:

• A stronger Permian, where natural gas takeaway came online earlier than expected.
• A 75,000-barrel-a-day expansion of its Cactus III pipeline.

The main risk is the interest bill. Over the last twelve months, Plains’ EBIT covered its interest a thinner 2.6x, against 5.03x at Enterprise. That’s despite Plains’ lower net debt of 2.89x EBITDA.

So which dividend wins?

Enterprise Products is the better dividend stock. Plains pays more today. But Enterprise’s coverage is set to widen to 1.89x on fiscal 2026 consensus while Plains’ holds at 1.68x, and Enterprise covers its interest nearly twice as well. That margin is what keeps a distribution growing through a bad year, and Enterprise has the record to show it.

$10,000 in Enterprise pays $610 a year now, and about $871 in year 10 at its 4.0% 5-year rate. So, call it an 8.7% yield on your cash today.

Plains has a real case. Its 6.9% yield is the bigger check, it carries less debt, and it has delivered the raises it promised. But at each one’s 5-year growth rate, Enterprise’s income would eventually catch up. It’s just that Plains’ 16.7% is a rebound from a cut, and the raises since have thinned its cushion. I’d rather own the distribution with more room to keep growing.

Of course, Enterprise’s 2026 consensus leans on volumes that may cool. Management said marine terminal volumes normalized in June and July after an initial rush in April and May. Its third-quarter results will show how much of that 16% gain holds up.

So what is Enterprise Products stock actually worth?

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!