This high-yield dividend stock is a huge passive income machine.

How can passive income be generated? There are two basic elements. First, you need to invest money up front. Second, you need an investment that pays you a regular dividend.

The good news is that there are many investment options that can pay off for you. In my opinion, there's one investment option in particular that's worth recommending. This high-yield dividend stock is a passive income machine.

Koon Tao Giant

Enterprise Products Partners (NYSE: EPD)is a leading midstream energy company. It was founded in 1998 with its headquarters in Houston.

The company's midstream platform also includes more than 300 million barrels of liquid petroleum storage, 42 natural gas processing lines, 26 fractionation towers, 20 deepwater terminals, two propane dehydrogenation facilities and two isobutane dehydrogenation facilities.

Enterprise is not satisfied with the status quo. The company has approximately $6.5 billion in major projects under construction. Most of these are related to NGL, including new plants in the Delaware and Midland basins and the Bahia Koon Road.

Investors can be assured that Enterprise Products Partners will deploy its cash wisely. Over the past 10 years, the name partner has averaged a return on invested capital (ROIC) of 12%. its ROIC has remained in the double digits every year since 2005, which includes the Great Recession, the 2014-2017 oil price crash, and the COVID-19 pandemic.

Attractively priced passive income machines

How about passive income?Enterprise Products Partners offers a great deal of passive income. The company's distribution yield is currently up to 7%. For every $10,000 you invest, you can earn over $700 per year.

This revenue is likely to grow over time, and Enterprise Products Partners has increased its distribution for 25 consecutive years at a compound annual growth rate of approximately 7%.

I am confident that Enterprise Carpet Partners will continue this success as well.Enterprise's adjusted cash flow from operations (CFFO) continues to grow. It isthe only familyContinued increase in adjusted CFFO per unit without any material asset sales 竝 Decrease in the number of units of Midstream.

The repayment of the debt will also not affect Enterprise Products Partners' dividend payout. The company manages its debt well. Moreover, it is the only midstream debt issuer with an A- credit rating.

In addition, Enterprise is attractively priced. Its units trade at 10.9 times forward earnings. This is much lower thanStandard & Poor's 500The energy sector has a forward earnings multiple of nearly 13.3.

A flaw.

Some may argue that Enterprise Products Partners' focus on fossil fuels may limit its growth. However, I do not see this as a drawback. Demand for natural gas and NGLs in particular will continue to grow. The company's midstream assets will be needed for a long time to come.

However, there is one drawback to investing in Enterprise: LP must provide a K-1 form for each unit holder. This can cause additional problems with tax returns.

Should you invest $1,000 in Enterprise Products Partners now?

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Keith Speights owns shares of Enterprise Products Partners.The Motley Fool recommends Enterprise Products Partners.The Motley Fool has a disclosure policy.

This High-Yield Dividend Stock Is a Passive Income Machine" was originally published by The Motley Fool.