Williams Partners’ Distribution Growth Plans for 2017 and Beyond
Williams Partners’ distribution forecast
Williams Partners (WPZ) declared a flat dividend of $0.15 ($0.60 annualized) per share for 2Q17. It slashed its distribution by 29.4% in 1Q17 as part of the financial repositioning. The company is expected to keep its dividend flat at $0.15 per share for the next two quarters. However, it’s expecting to grow its distribution by 5.0%–7.0% annually over the next several years while mainlining a distribution coverage of 1.2x for 2017 and in excess of 1.1x thereafter.
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Williams Partners’ distribution yield
Williams Partners is currently trading at a distribution yield of 6.2% based on its recent quarterly distribution. That’s below the last five-year, two-year, and one-year averages of 7.0%, 10.2%, and 7.7%, respectively. The sharp fall in Williams Partners’ distribution yield in April 2017 is due to the distribution cut. Its peers Spectra Energy Partners (SEP) and Boardwalk Pipeline Partners (BWP) are currently trading at 6.6% and 2.8%, respectively. WPZ’s distribution yield is lower than the Alerian MLP ETF (AMLP), which is at 8.0%. That might reflect Williams Partners’ improved balance sheet position and strong distribution guidance.
In the next three parts, we’ll look at MPLX (MPLX), which has the fifth-highest 2017 capital spending budget among midstream companies.