Westlake Chemical Partners: A Value Investor's Dream With Superb Dividend
Summary
- WLKP’s primary business revolves around its long-term Ethylene Sales Agreement with Westlake Corporation, which guarantees that Westlake purchases 95% of WLKP's ethylene production at a fixed margin.
- The company offers a solid dividend track record with a 12-month yield of 8.45% and consistent growth, providing stability for investors.
- Despite the cyclical nature of the petrochemical sector, WLKP's fixed-margin structure and operational efficiency offer a low-risk investment opportunity. Modest debt level and strong liquidity position is a plus.
- The discounted cash flow (DCF) model suggests a intrinsic value of $41.32 per share, a steal considering the current market price.
- A strong choice for income-focused investors who are willing to hold for the VERY long term.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in WLKP over the next 72 hours. 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.
I am a CFA charterholder (as of Nov 4, 2024) and adhere to the CFA Institute’s Code of Ethics and Standards of Professional Conduct. The analysis and opinions expressed in this article are my own and independent from any organization I work for or am affiliated with. I have no current position in WLKP but may consider taking one within the next 72 hours. All recommendations and opinions are based on independent, objective analysis."
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