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Western Midstream Is An Important Core Holding For Any Portfolio


  • Western Midstream is an important core holding for any portfolio with its reliable portfolio of assets.
  • The company is dramatically increasing its dividend to a yield of more than 8%, with the potential for additional increases.
  • After this, there are still growth capital expenditures, along with share and debt repurchases.
  • The company can continue generating reliable and growing double-digit shareholder rewards.
  • I do much more than just articles at The Energy Forum: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

Oil Tank

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Western Midstream (NYSE: NYSE:WES) is one of the largest midstream companies, owned partially by Occidental Petroleum (NYSE: OXY). The company has a $10 billion market capitalization, and a more than 5% 2021 dividend yield that's expected to

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This article was written by

The Value Portfolio profile picture

The Value Portfolio specializes in building retirement portfolios and utilizes a fact-based research strategy to identify investments. This includes extensive readings of 10Ks, analyst commentary, market reports, and investor presentations. He invests real money in the stocks he recommends.

He is the leader of the investing group The Retirement Forum with features including: model portfolios, macro overviews, in-depth company analysis and retirement planning information. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of WES, OXY 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (11)

You guys touched a Third rail with Amazon. I agree with you. Lots of issues
going south at the same time. Stagflation number one, overbuilds fulfillment
centers at high cost. Immediately adds depreciation. High number of employees required per million in sales with wage pressures intensifying.
As we well know Energy cost especially Diesel will continue to rise, all utilities
double. Big increase in cost of money I have no reason to research that.
I know EPD loans by heart almost. That last Billion at 3.3% for fixed 30 years pure Genius. The EV bug will bite more than once, future decommission cost are unknown but will be high. The second most Toxic risk very similar to the current #1, spent Nuclear fuel rod storage. I personally hope we stop lithium
batteries soon, too many uneducated people believe in magic recycling
It’s been 80 years and we haven’t solved Nuclear waste.
People literally laughed when I posted on SA about the coming Stagflation
and what I was doing to build my own contracted word Stagfolio.
I mentioned Tubi on your Amazon article, if you are not using it give it
a try. Big competitor for all streaming services. Free.
I already follow you.
Best Luck
Love their three pronged approach of paying down debt, buying back shares, and paying a very nice distribution. Very shareholder friendly company.
I had not added to my 2020 and early 2021 units for some time foolishly stopping buying at $17.00 but recently I added some at $24.00 the increase
in distribution makes it realistic to add or even start a position when combined
with increasing unit cost of other MLP’S.
Best Luck
Boy. everyone loves energy companies now. It took more courage to buy in March of 2020 when the oil market crashed.
I bought shares over a couple weeks with average cost about $6.50 and got mostly bad news stories as it slowly recovered. I sold about 25% at $14 and
whatever the premium was for the covered calls I had sold. That returned over
half the investment and now can collect distributions at about 30% on my cost
on the rest.
The most profitable stock I ever bought and now a big raise on income.
So it’s a permanent hold for me. Should of bought more.
Thanks for the information.
Limestone Cowboy profile picture
This is a no-brainer. The legacy APC acreage is functionally dedicated, guaranteeing them ~20% rates of return on anything that they build. With the combined heft of the Delaware basin positions, WES has become a monster in terms of capital efficiency.

Also note that OXY won't be in a hurry to cut the distributions, since it still owns such a large chunk of the shares. With the acreage dedicated in their most important positions, there's functionally no chance that they sell down the position, as they need to retain control.

The next big impulse will be gas production. With prices climbing past $5/mcf and on the way to $7-8, the large sucking sound of the LNG terminals on the gulf will be answered by WES pipe. Even in the rockies, gas demand is spiking, and much of the less liquids rich acreage now looks poised for prime time. Midstream companies make far more on gas than they do on oil or water treatment, especially in the age of produced water fracs. With the shutdown of the European chemical complex, the future has never been brighter for ethane to butane.

Buy it while you can, this is a $40 stock after the $2 dividends get paid.
ZeroGravitas profile picture
The base dividend on SA is listed as. 33 per qtr or $1.32. Your article mentions a $2 base distribution. Am I missing something?
@ZeroGravitas read the last earnings report. They are increasing the distribution to 50 cents a quarter or $2 per year , a 53% increase.
@bayarea99 thanks for update on distribution.
@ZeroGravitas You are not alone with your comment. All of the brokerage sites (like Fidelity) and stock info sites (like Yahoo) that I am aware of are still reporting distribution yields in the low 5% range based on annualizing the last DECLARED dividend of 32.7 cents. 32.7 x 4 = 1.308 annualized / 24.75 price = 5.28% distribution yield.

The going forward quarterly distribution of 50 cents per quarter has been ANNOUNCED but the first one (due toward end of this month) has yet to be DECLARED. The reporting services won't change their forward annualized distribution to 2.00 until the first 50-center is declared. Then 2.00 / 24.75 price = 8.08% annualized.

IMO, this market is slow and lazy. It will wait until 50 cents per quarter is in the rear view mirror and hits it on the head like a 2 x 4 before it realizes the yield really is over 8% at any price under 25.00. Then and only then will it bid the price up until the yield is less than 7%. Thus I expect a price of 28.57 (2.00 / 7%) shortly after the first the first 50 cents is declared.

Load up the truck at any price under 25.

Added by edit: PS: I just talked myself into buying another 3,000 at 24.62.
If I'm wrong about the market bidding the price up until the yield is about 7% or just under, I'm content to collect more than 8% while I wait.

The first quarter's distribution announcement was on 4/20 last year. That's 2 weeks from today if it's the same date.
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