Midstream MLPs are increasing distributions despite volatility in energy markets, reinforcing the positive outlook for midstream.
Energy Transfer LP (ET), Hess Midstream LP (HESM), DCP Midstream LP (DCP), and Enterprise Products Partners LP (EPD) have all announced increases in their distributions for the second quarter.
“Recent midstream dividend increases reinforce management teams’ positive outlooks on their businesses,” Stacey Morris, head of energy research at VettaFi, said. “Even as commodity and equity markets have been volatile, energy infrastructure companies are generating stable cash flows and significant free cash flow. Midstream MLPs and corporations continue to deliver attractive income to their investors.”
Energy Transfer announced on July 26 a quarterly cash distribution of $0.23 per share, $0.92 on an annualized basis, for the second quarter, a 15% increase over the first quarter and a 50% increase year over year, according to a statement from the firm.
The company said in the statement this distribution increase represents another step in its plan to return additional value to unit-holders while maintaining its target leverage ratio of 4.0x-4.5x debt-to-EBITDA. Future increases to the distribution level will be evaluated quarterly with the ultimate goal of returning distributions to the previous level of $0.305 per quarter, or $1.22 on an annual basis while balancing the partnership’s leverage target, growth opportunities, and unit buy-backs.
Hess Midstream on July 25 declared a quarterly cash distribution of $0.5559 per Class A share for the second quarter, an approximate increase of 1.2% over the distribution for the prior quarter and 10.3% from the year-ago quarter, consistent with Hess Midstream’s targeted 5% growth in annual distributions per Class A share, according to a statement from the firm.
Hess Midstream LP reiterated its annual distribution per share growth target of 5% through at least 2024 with expected annual distribution coverage greater than 1.4x, including distribution coverage greater than 1.5x in 2022, the firm said in a statement.
DCP Midstream announced on July 19 a second quarter cash distribution of $0.43 per unit, or $1.72 per unit on an annualized basis, representing a 10% increase over the prior quarter’s distribution and a 10% increase year over year, according to a statement from the firm.
Enterprise on July 7 declared the quarterly cash distribution paid to limited partners holding common units for the second quarter of $0.475 per unit, or $1.90 per unit on an annualized basis, a 3.3% increase from the first quarter and a 5.6% increase over the distribution declared for the second quarter of 2021, according to a statement from the firm.
This year will be Enterprise’s 24th consecutive year of distribution growth, according to the statement.
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