Plains All American Pipeline: A New Era Of Distribution Growth Beginning

Summary

• After five painful years with three separate distribution reductions, Plains All American Pipeline has recently announced an intention to increase their distributions.
• If approved by the board, which seems very likely, this will amount to a very solid near 21% increase.
• Their operating cash flow outperformed expectations during 2021 and whilst their guidance for 2022 is rather flat and underwhelming, at least distribution coverage should remain very strong.
• This will help them continue deleveraging whilst also providing scope for further distribution growth.
• Since this should mark a new era of distribution growth beginning, I believe that maintaining my buy rating is appropriate.

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Introduction

Following five painful years with three separate distribution reductions, the outlook for a return to distribution growth was finally looking up for Plains All American Pipeline (NASDAQ:PAA) during late 2021, as my

Analyst’s Disclosure:I/we have a beneficial long position in the shares of PAA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.