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Behind 4 Key MLP General Partners

PART:
1 2 3 4 5 6 7 8 9 10 11
Part 4
Behind 4 Key MLP General Partners PART 4 OF 11

Why Plains GP Holdings Has the Highest Distribution Yield among Peers

Distribution yield

Plains GP Holdings (PAGP) has the highest distribution yield (9.4%) in our select peer group for this series. This could be attributed to Plains GP Holdings’ and Plains All American Pipeline’s (PAA) distribution cuts and the huge decline in these stock prices. The distribution-to-dividend yield of a stock refers to the ratio of annualized distribution-to-dividend based on the current stock price.

Why Plains GP Holdings Has the Highest Distribution Yield among Peers

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Williams Companies (WMB) has the lowest dividend yield (4.0%) in our select group. WMB’s dividend yield fell after its recent dividend cuts. Its current dividend yield is lower than the five-year average of 5.3%, and the decline in its dividend yield, despite cuts, could be attributed to its better balance sheet position and its target of long-term sustainable dividend growth.

WMB is followed by Western Gas Equity Partners (WGP). WGP’s lower-than-average distribution yield of 5.2% reflects its strong distribution growth targets amid the current weakness in the energy sector.

Energy Transfer Equity’s (ETE) distribution yield of 6.5% is slightly higher than the peer and historical averages of 6.3% and 5.4%, respectively. However, all these GPs (general partners)—except PAGP—have lower distribution yields than the Alerian MLP ETF (AMLP).

We’ll look into the distribution growth target of these GPs in the next part of the series.

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