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BP Midstream Partners: A 12% Distribution Yield With A Solid Base For Growth

Published Thu, 26 Nov 2020 10:56:16 -0500 on Seeking Alpha

Seeking AlphaDividend Ideas | Basic MaterialsBP Midstream Partners: A 12% Distribution Yield With A Solid Base For GrowthNov. 26, 2020 10:56 AM ET|| About: BP Midstream Partners LP (BPMP), Includes: BPby: Daniel ThurechtDaniel Thurecht Long-term horizon, Contrarian, Oil & Gas, industrialsSummaryBP Midstream Partners has once again sustained their very high distribution yield of 12% by producing resilient financial results.
They have strong distribution coverage, low leverage, and very strong liquidity, which all work together to provide a solid base for potential growth.
Whether this will eventuate largely depends upon their parent, BP, who is currently undertaking an eco-friendly transition from being an oil and gas supermajor to an integrated energy company.
Thankfully, the Whiting Refinery and offshore Gulf of Mexico oil and gas production will still sit in the core of their portfolio and, thus, support BP Midstream Partners.
Whether this leads to growth remains unknown at the moment, but they are still worthy of a bullish rating due to their very high and sustainable distribution yield.
Introduction
The very high 12% distribution yield of BP Midstream Partners (NYSE: BPMP) stands out for actually being increased amidst the wave of Master Limited Partnerships reducing and, sometimes, even completely suspending their distributions during 2020, as my previous article discussed. Since a very high yield without the very high risk is rather abnormal, this article provides a follow-up analysis that reviews their third quarter of 2020 results as well as their prospects to provide further growth in the future.
Executive Summary And Ratings
Since many readers are likely short on time, the table below provides a very brief executive summary and ratings for the primary criteria that were assessed. This Google Document provides a list of all my equivalent ratings as well as more information regarding my rating system. The following section provides a... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
BP 37.67   14.3 2.64 2.44 6.45