Warren Buffett’s Berkshire Hathaway is a conglomerate that owns a large number of companies, including Northern Natural, a midstream giant focused on natural gas. If you want to invest like Buffett, you can consider buying high-yielding Enterprise Products Partners, which is another midstream giant in the natural gas sector. Buffett likes to collect cash, and the midstream business is attractive to him due to its reliable cash flows generated by infrastructure assets. Berkshire Hathaway is currently building up its cash hoard and short-term investments as it looks for new acquisition opportunities.
Northern Natural, acquired by Berkshire Hathaway, has 14,200 miles of natural gas pipelines, making it the largest interstate natural gas pipeline system in the U.S. It also operates natural gas storage assets and liquefied natural gas storage peaking units, generating steady cash flows. Similarly, Enterprise Products Partners is a large energy infrastructure company with a diversified portfolio that includes pipelines, storage, processing, and transportation facilities. It exports energy worldwide and offers a hefty 6.9% yield, making it appealing to income-focused investors.
Enterprise Products Partners, with a market cap of over $60 billion, has increased its distribution for 25 consecutive years and has a solid balance sheet with strong coverage of its distributions. While its distribution is a significant part of total returns, investors can expect steady income growth due to planned capital investments and regular price increases. The company is a master limited partnership, which may create some tax complications but is generally outweighed by the attractive income stream it provides to investors.
Investors who want a Buffett-like investment can consider buying shares of Enterprise Products Partners to directly benefit from the cash flows generated by its operations. While Berkshire Hathaway owns Northern Natural, it does not pay a dividend, so buying shares of Enterprise allows investors to collect its distributions and use them as they see fit. This high-yield pipeline stock offers a reliable income stream that may appeal to dividend investors looking for a steady return on their investment.
