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Midstream Dividend Update: More Maintaining Than Cutting

Published Sun, 03 May 2020 08:00:53 -0400 on Seeking Alpha

Given most midstream dividends for 1Q20 have now been announced, today's piece discusses how payouts are trending amid a challenging macro environment for energy.
While there have been a number of dividend cuts to date, the majority of constituents by weighting in both the Alerian MLP Infrastructure Index and the Alerian Midstream Energy Select Index are maintaining their dividends sequentially with a few names even growing.
While 1Q dividend announcements have included a significant number of painful cuts, companies are reducing dividends to improve their balance sheets and increase financial flexibility given ongoing headwinds in energy.

Given most midstream dividends for 1Q20 have now been announced, today's piece discusses how payouts are trending amid a challenging macro environment for energy. While there have been a number of dividend cuts to date, the majority of constituents by weighting in both the Alerian MLP Infrastructure Index (AMZI) and the Alerian Midstream Energy Select Index (AMEI) are maintaining their dividends sequentially with a few names even growing (see charts below). Note that two AMEI constituents have yet to report dividends (listed as "Unknown" in the charts). For the AMZI, the weighting1 of MLP constituents growing or maintaining their distributions is 68.5%, while the weighting is slightly lower at 61.9% for the MLPs and C-Corps of the AMEI. The quantity of sequential dividend cuts in both indexes is significant but notably weighted toward smaller names. Twelve out of 21 AMZI constituents have announced distribution cuts accounting for 31.5% of the index by weight, while 14 out of 34 AMEI constituents have announced cuts representing 20.2% of the index. Many of the companies that have cut share similar characteristics, including greater exposure to the wellhead given gathering and processing activities, higher leverage, and lower distribution coverage (read more). With a handful of midstream companies still to declare... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
NGL ENERGY PARTNERS LP 12.93   5.0 2.57 1.56 12.04
DELEK LOGISTICS PARTNERS LP 30.70   12.5 2.46 3.40 11.22
HOLLY ENERGY PARTNERS LP 26.40   14.7 1.80 2.69 9.93
MPLX LP 28.61   12.4 2.30 2.67 9.28
NUSTAR ENERGY 26.89   0.0 -6.61 2.40 8.95
WILLIAMS 24.29   303.6 0.08 1.52 6.12
CHENIERE ENERGY PARTNERS LP 44.55   0.0 0.00 2.44 5.48
KINDER MORGAN 20.42   20.6 0.99 1.00 4.94
TRANSCANADA 49.89   14.6 3.42 2.25 3.14

NGL ENERGY PARTNERS LP - NGL
NGL ENERGY PARTNERS LP - NGL  


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