EnLink Midstream’s distribution
EnLink Midstream Partners (ENLK) is expected to keep its quarterly distribution flat at $0.39 per unit for all of 2017. The partnership expects to use the excess cash flows for improving its distribution coverage. According to the press release, the company is “projected to exit 2017 with a distribution coverage ratio in excess of 1.0, assuming flat distributions throughout 2017. EnLink expects to continue to build excess coverage during 2017, supporting the potential to resume distribution growth during 2018.”
In comparison, ENLK peer Western Gas Partners (WES) continued to increase its distribution in the fourth quarter of 2016. For more detail, read Western Gas’s Distribution News: How’s It Looking Now?
EnLink Midstream (ENLC), ENLK’s GP (general partner), would keep its distribution flat at $0.26 per unit in 2017 while maintaining a distribution coverage of 1.1x–1.2x. However, ENLC expects to resume distribution growth before ENLK considering its stronger distribution coverage.
EnLink Midstream’s distribution yield
Based on 2017 distribution guidance, ENLK is trading at a high distribution yield of 8.5%. In comparison, ENLK’s peers Enable Midstream Partners (ENBL) and Western Gas Partners are currently trading at 7.7% and 5.3%, respectively. ENLK’s high distribution yield might reflect its flat distribution and low coverage.
EnLink Midstream’s market performance
EnLink Midstream Partners, which had gained 17.7% in 2016, had a weak start to 2017. It has risen 0.1% since the beginning of 2017. At the same time, the Alerian MLP ETF (AMLP), which comprises of 25 midstream energy MLPs, has risen 4.8%. EnLink Midstream has lost 6.6% in 2017.