Western Midstream: 9% Yield Looks Solid Despite Moderating Growth

Gary Gambino
6.05K Followers
(10min)

Summary

  • Western Midstream Partners continues to hit throughput records in the Delaware basin, but slower growth is expected going forward.
  • With the moderation in growth, I am slightly reducing my projections for EBITDA and distributions next year.
  • WES' 9.2% forward distribution yield remains sustainable and could grow to 10% by 2027.
  • Despite lower growth expectations, WES continues to offer one of the best yields among midstream MLP peers, justifying its Buy rating.
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Consolidating Gains Amid Steady Operating Environment

Western Midstream Partners (NYSE:WES) partnership units spent most of the last quarter trading sideways around the $38 level. This is slightly below where they traded at the time of my last article

This article was written by

6.05K Followers
I retired early after 22 years in the energy industry with roles in engineering, planning, and financial analysis. I have managed my own portfolio since 1998 and have met my goal to match the S+P 500 return over the long term with lower volatility and higher income. I mostly write on positions I already hold or am considering changing. I prefer to hold positions for the long-term unless there is a compelling reason to sell. I look for investment opportunities without regard to asset class, market cap, sector, or yield. I would rather maximize total return over time by buying when price is low relative to intrinsic value.

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