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Why DCP Midstream Won’t Resume Distribution Growth in 2017

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Jan. 10 2017, Updated 7:37 a.m. ET

DCP Midstream’s distributions

DCP Midstream Partners (DPM) is expected to keep its distributions flat for all of 2017, even after the simplification transaction. The partnership has declared a flat distribution of $0.78 per unit, or $3.12 per unit annualized, for the past several quarters.

This could be attributed to DPM’s low coverage ratio. In a related investor presentation, DPM noted that its sponsors, including Phillips 66 (PSX) and Spectra Energy (SE), plan to provide “$100 million IDR giveback annually through 2019, if necessary, to maintain at least a minimum 1.0x distribution coverage.”

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