Western Midstream Partners: A Great, Almost Double-Digit Yield

seekingalpha11-20

Western Midstream Partners, LP has a more than 9.2% dividend yield that the company can afford with its FCF.The company is continuing to grow with its capital spending, with double-digit YoY adjusted ...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWestern Midstream Partners: A Great, Almost Double-Digit Yield\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-20 23:08 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739013-western-midstream-partners-a-great-almost-double-digit-yield><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Western Midstream Partners, LP has a more than 9.2% dividend yield that the company can afford with its FCF.The company is continuing to grow with its capital spending, with double-digit YoY adjusted ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739013-western-midstream-partners-a-great-almost-double-digit-yield\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4590","symbol_name":"PTP","start_time":0,"source_url":"https://seekingalpha.com/article/4739013-western-midstream-partners-a-great-almost-double-digit-yield","article_id":"2484620143","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/898873626/image_898873626.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2484620143","pubTimestamp":1732115294,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Western Midstream Partners, LP has a more than 9.2% dividend yield that the company can afford with its FCF.The company is continuing to grow with its capital spending, with double-digit YoY adjusted ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4590":"PTP","BK4144":"石油与天然气的储存和运输","WES":"Western Midstream Operating, LP."},"translate_title":"西部中游合作伙伴：几乎两位数的收益率","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"WES":0.9},"content_text":"Western Midstream Partners, LP has a more than 9.2% dividend yield that the company can afford with its FCF.The company is continuing to grow with its capital spending, with double-digit YoY adjusted EBITDA growth.Going forward, we expect the company to continue generating strong shareholder returns, making WES stock a valuable investment.   AlexanderXXI/iStock via Getty Images  Western Midstream Partners, LP (NYSE:WES) is a large midstream company primarily owned by Occidental Petroleum (OXY). The company has an almost $15 billion market cap and a dividend yield of more than 9%. As we'll see throughout this article, despite modest growth, the company's strong execution will support hefty shareholder returns. Western Midstream Highlights The company has continued to grow its throughput across its entire asset portfolio.   Western Midstream Investor Presentation The company's total natural-gas throughput increased 1% QoQ to 5.2 billion cubic feet/day. Delaware Basin natural gas increased by 2% QoQ as the company has continued to achieve record throughput from one of the fastest growing basins. The Delaware Basin has seen incredibly weak natural gas prices, so takeaway capacity is well appreciated. The company has continued to maintain hefty system operability >98% with $800 million in 5.45% senior notes issued, showing its financial strength. The company has continued to add capacity and grow its assets across the board.   Western Midstream Investor Presentation The actual margins are visible above, where margins and throughput have both increased substantially. The company's crude oil and NGLs throughput have also remained strong, along with produced-water throughput used within the company's fracking options. This is strong performance across the board for the company. Western Midstream Financial Performance Financially, the company has continued to perform quite well.   Western Midstream Investor Presentation The company has managed to reduce its net leverage substantially over the past 5-years. Specifically, from more than 5.0x, the company has cut its leverage to less than 3.0x, giving itself one of the strongest midstream financial pictures. The company is continuing to invest in expansion while looking at attractive opportunities to expand its portfolio. The company has a 9.2% dividend yield that costs it more than $1.3 billion annually. However, it's one that it can afford. The vast majority of the company's FCF goes towards dividends.   Western Midstream Investor Presentation The company earned more than $2 billion in operating cash flow in 2024 annualized, with almost $800 million spent on capex that the company could comfortably afford. Some has gone towards maintenance capital, while other capital has gone towards growth. The company's FCF is more than $1.4 billion annualized, which primarily goes towards distributions. The company has minimal post-dividend FCF, roughly $100 million annualized. However, given its incredibly strong market-leading dividend, not having substantial returns outside that and growth, is manageable. Western Midstream Shareholder Returns The company has remained committed to shareholder returns with an 11% YoY increase in adjusted EBITDA.   Western Midstream Investor Presentation The company has also managed to increase its FCF by 19% YoY while decreasing its leverage ratio by 0.7x, primarily supported by the company's growth in adjusted EBITDA. The company has $3.2 per unit in estimated base distributions, which is a dividend yield of just over 9.2% that forms up the bulk of its shareholder returns and FCF usage.   Western Midstream Investor Presentation The company is now looking to optimize its shareholder returns as its financial position has improved. The company has $6.89 billion in total net debt, which lines up with its debt to EBITDA ratio of just under 3.0x. The company's $750-800 million of capital expenditures is 64% expansion (~$500 million) which is ~3% of the company's market cap towards growth. It's a modest growth expenditure, but one that the company can comfortably afford with bolt-on to its infrastructure. The company's near-term obligations are minimal with its modest debt. Given its dividend yield, unit repurchases could be quite profitable for the company. Thesis Risk The largest risk to our thesis is the company needs growing cash flow to grow its shareholder returns, after virtually all of its FCF goes towards shareholder returns. That means the company is limited in terms of massive shareholder returns, which could hurt its ability to continue driving growth in shareholder returns. Conclusion Western Midstream has an impressive portfolio of assets. The company has an almost $15 billion market capitalization, and Occidental Petroleum has a less than 50% shareholder ownership, which reduces the risk to the company. The company has continued to generate strong financial returns with hefty YoY growth in EBITDA and FCF.  Western Midstream Partners, LP has a more than 9.2% dividend yield that it can afford with its FCF. At the same time, the company is spending more than 3% of its market cap on growth. With double-digit adjusted EBITDA and FCF growth YoY, the company should be able to provide strong shareholder returns, making it a valuable investment.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2484620143"}