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Enable Midstream’s Dividend Reinvestment Plan: Must-Knows

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Enable Midstream’s distributions

Enable Midstream Partners (ENBL) announced a dividend reinvestment plan on June 23. It explained, “registered unitholders may invest all or a portion of their cash distributions in Enable’s common units.” The partnership might or might not issue additional equity for common units purchased under the plan. According to a related filing, “The Plan is designed for long-term investors who wish to invest and build their common unit ownership over time.”

Investors who are interested in increasing their investment in ENBL could save brokerage fees under this plan. It will be interesting to see investors’ response to this plan amid the current global uncertainties.

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ENBL declared a distribution of $0.318 per unit for 1Q16. This distribution represents a 2.0% YoY (year-over-year) increase versus 1Q15 and a flat distribution compared to the previous quarter. Based on this distribution, the partnership is trading at a distribution yield of 8.7%. ENBL’s peers Crestwood Equity Partners (CEQP), Western Gas Partners (WES), EnLink Midstream Partners (ENLK), and Summit Midstream Partners (SMLP) are trading at distribution yields of 11.7%, 7.2%, 9.6%, and 10.5%, respectively.

Enable Midstream’s distributable cash flows

ENBL’s 1Q16 distributable cash flow rose 20.0% YoY, resulting in a slight improvement in its 1Q16 coverage ratio compared to 1Q15. The partnership expects fiscal 2016 distributable cash flow to be between $535 million and $565 million, resulting in a coverage ratio greater than or equal to one.

Enable Midstream’s capital expenditure

The partnership expects to spend $375 million on capex growth in 2016, of which $300 million will be invested in gathering and compression–related infrastructure. The partnership’s capital expenditure has fallen significantly. Most midstream companies have suspended or delayed their capital projects in response to market demand changes.

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