Enterprise Products Partners (EPD 1.39%) has an illustrious history of growing its cash distributions to investors. It has reached the quarter-century milestone of consecutive annual-payout increases. Several factors have helped fuel its growth, including its ability to secure and build high-return, organic-expansion projects.

The master limited partnership (MLP) has several more expansion projects currently under construction. In addition, it has been working on securing a potentially needle-moving, organic-growth project for the past several years. It appears to be getting close to approving that project, which would add even more fuel to its long-term growth engine.

The spotlight on SPOT

Last month, Enterprise Products Partners finally received the deepwater port license for its proposed Sea Port Oil Terminal (SPOT). That license enables the company to move forward with the next step in developing an offshore terminal capable of loading 2 million barrels of oil per day.

It would be a large-scale undertaking for the company. Reuters reported that the project could cost $3 billion to build. However, Enterprise's co-CEO Jim Teague commented in the company's first quarter earnings-conference call that capex for the project is "not what was in the Reuters article by a long shot." Even at a much lower investment level, it would be a sizable investment for the company. For perspective, it expects capital spending to average around $3.25 billion over the next two years based on currently approved projects and up to $3.75 billion annually at the upper end of its estimated growth capital-spending range. That's roughly in line with the $3.5 billion it invested into growth-capital projects last year.

The company likely won't fund the entire project on its own. In 2019, Enterprise Products Partners and Enbridge (ENB 2.29%) signed an agreement to jointly develop a Gulf of Mexico oil export terminal. Enbridge can purchase an interest in SPOT, subject to receiving a deepwater port license, which it has recently obtained. Enbridge has significant financial flexibility, so it wouldn't be a surprise to see it elect to exercise that option and participate in this project.

However, funding the project is a secondary concern at the moment. Enterprise Products' priority is commercialization. Brent Secrest, the company's chief commercial officer, stated on the first-quarter call that it expects to have two contracts by the end of the next month. It's also engaged in discussions with other parties to commercialize the project. The company won't move forward with SPOT unless it has commercial contracts supporting the project.

Visible growth ahead

Adding SPOT would enhance Enterprise's already strong organic-growth backlog. The company ended the first quarter with $6.9 billion of approved major projects under construction. That's a $400 million increase over the last month after it added several more gathering and related projects in the Permian Basin. It now has clear visibility to grow its cash flow through 2026. SPOT would extend that even further, given that the company could finish that project by 2027 if sanctioned this year.

That backlog drives the company's view it will invest $3.25 billion to $3.75 billion annually over the next two years. Meanwhile, it anticipates investing another $2 billion to $2.5 billion in 2026 (which includes $750 million in approved projects). It has ample financial flexibility to fund its growth and pay its lucrative distribution. It has generated over $8.2 billion of cash flow from operations over the last 12 months, easily covering its distributions ($4.4 billion) and cash used in investing activities ($3.6 billion). Meanwhile, it has the strongest balance sheet in the midstream sector with a low 3 times leverage ratio and A-rated credit.

The company's strong financial profile gives it the flexibility to continue approving capital projects and make acquisitions as opportunities arise. Earlier this year, it spent $400 million to acquire joint-venture interests and an additional interest in another pipeline from fellow MLP Western Midstream Partners. That deal will supply it with some incremental cash flow.

The fuel to continue producing a growing income stream

Enterprise Products Partners is a model of consistency. The MLP has steadily grown its earnings by making accretive acquisitions and investing in high-return expansion projects. That has given it the fuel to increase its distribution each year. Given its robust expansion-project backlog and strong financial foundation, its payout should continue rising in the future.

Securing SPOT would help enhance and extend its long-term growth outlook, making it an exciting project to watch. It would potentially make Enterprise an even more appealing option for investors seeking steady income growth.