Genesis Energy, L.P. (GEL) Undertakes Horizontal Expansion

Enterprise Products Partners L.P. (NYSE:EPD) has also partnered in midstream energy infrastructure projects in the past as well. In light of rising demand for natural gas, domestically and for export, this venture is likely to boost the company’s revenues and income in the year 2014.

Moreover, the company is in the process of developing two refined product export facilities to serve the rising demand of refined products export capability on the United States Gulf Coast. In the last five years, the U.S. has gone from importing  roughly 1 million barrels per day (MMBbls/d) of refined products in 2007,  to exporting over 1 MMBbls/d in 2012. This will offer customers substantially improved access to the company’s marine services at its ports. It is expected to commence operations in early 2014. This vertical integration will strengthen the company’s foothold in this industry and increase its market presence. This will result in higher revenues and improved margins in the subsequent year.

Conclusion

Genesis Energy, L.P. (NYSE:GEL) has acquired a lucrative business and is expected to add market share and operational capacity to meet rising demand. The company is also providing a higher return to investors by registering trailing twelve months (ttm) Return on Equity (ROE) of 10.8% compared to the industry’s ROE (ttm) of 9.5%. Genesis Energy also intends to pay a dividend that providesa consistent, reliable and attractive return, even in periods of its business cycle downturn. In my opinion, this stock should be bought.

In the light of its bright future outlook, Enterprise is recommended for investors who demand  dividends in addition to price appreciation. The company increased its dividends this month for the 36th time in a row and is expected to do so in the future as well.

Awais Iqbal has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners L.P.. Awais is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Genesis Undertakes Horizontal Expansion originally appeared on Fool.com is written by Awais Iqbal.

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