Published Sat, 09 Feb 2019 09:15:00 -0500 on Seeking Alpha
Over the past 2 weeks, we've profiled several high yield companies in the midstream energy industry, with our 2 articles:
"Income Investors: A Wave Of 6% To 11% Cash Yields Is Coming Your Way In February"
"The Second Wave Of 5% To 17% Yields In February"
Three of these companies have reported Q4 '18 earnings with very good results:
Enterprise Products Partners LP (EPD) is often seen as the "Cadillac" in this industry, due to its well-managed growth and debt leverage management. Unlike many companies in this industry, which grew too fast and became over-leveraged, EPD has routinely retained a chunk of its distributable cash flow - DCF - to help self-fund its growth projects.
This approach has aided EPD in not becoming over-leveraged. Interestingly, we're seeing the self-funding approach referenced much more often over the past year in midstream companies' quarterly earnings presentations and earnings calls. Apparently, other management teams have picked up on EPD's success.
EPD is a giant, with a $60B market cap, compared to newcomer Hess Midstream Partners LP (HESM), which IPO'd in April 2017.
HESM's management followed a self-funding growth program in 2018, with good results.
"We accomplished this while primarily self funding both our $325 million consolidated expansion capital program and our growing distribution, ending the year with no debt. In addition, based on our 2019 guidance, we can achieve our growth targets without the need for the equity... Read more
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