Enterprise Exits Energy Transfer Equity... Distribution Hike Machine To Continue (EPD, ETE, AMJ, AMLP, KYN)

Enterprise Products Partners L.P. (NYSE: EPD) is cleaning out of its position in Energy Transfer Equity, L.P. (NYSE: ETE).  The MLP has announced that it has agreed to sell 22,762,636 common units of Energy Transfer Equity, L.P. (NYSE: ETE) which are owned by an Enterprise subsidiary “in a private transaction to certain purchasers.”

The projected proceeds of the sale are put at about $825.1 million, which comes to roughly $36.24 per unit.  The most recent price was $39.80 and the 52-week range is $30.78 to $47.34.  Enterprise noted that the proceeds will be used for general partnership purposes, including funding growth capital projects and that the sale should close in January 2012.

Enterprise Products Partners L.P. is already massive with a $39 billion market capitalization, while Energy Transfer Equity has a market value of about $8.9 billion.  Enterprise units trade at $45.52 and the consensus analyst price target objective from Thomson Reuters is $49.11.  Energy Transfer Equity trades at $39.80 and the consensus price target objective.

This matters for “dividend investors” even though these MLP payouts are referred to as distributions of both income and a return of capital component.  We just recently gave an MLP sector outlook for 2012 for the 24/7 Wall St. 2012 Model Dividend Portfolio.

JPMorgan Alerian MLP Index ETN (NYSE: AMJ) and ALPS Alerian MLP ETF (NYSE: AMLP) both include these and many other key ETFs, and Kayne Anderson MLP Investment Company (NYSE: KYN) lists both of these MLPs in the top ten holdings with Enterprise representing 9.1% and Energy Transfer representing 4.2%.

What Enterprise did not say is that the proceeds are likely to allow the MLP to keep boosting payouts ahead.  It is quarter after quarter that these MLPs keep hiking their quarterly payouts, and that is true for Enterprise as well.

JON C. OGG