Plains All American Pipeline (PAA) Hikes Distribution Rate - Analyst Blog
Plains All American Pipeline, L.P. PAA has declared a 7.8% year-over-year and 1.5% sequential increase in its quarterly cash distribution rate. The revised cash distribution of 69.5 cents per unit will be paid on Aug 14, 2015 to unitholders of record as on Jul 31.
The increased rate raises Plains All American’s annual distribution to $2.78 per unit, which reflects a yield of 6.4% based on the closing unit price of $43.56 on Jul 7, 2015. The distribution yield is higher than the industry average of 5.6%.
The latest hike will mark the 24th consecutive quarter of incremental distribution by Plains All American. The partnership has increased its quarterly distribution to limited partners in 43 out of the last 45 quarters.
Plains All American’s strategy of paying cash distribution and increasing the same at regular intervals reflect its commitment to enhance long-term value of its unitholders.
Previously, on Apr 7, the partnership had announced an 8.7% hike in its quarterly cash distribution rate to 68.5 cents per limited partner from 63 cents per unit paid in May 2014.
A stable liquidity profile supports Plains All American’s systematic distribution rate hike program. The partnership exited first-quarter 2015 with a committed liquidity of $4.4 billion, higher than the 2014-end level of around $2.58 billion.
Apart from paying regular cash distributions, Plains All American utilizes funds for expanding its operations through both organic and inorganic growth, and efficiently realizes positive results from these ventures. Scheduled completion of several under-developed projects and synergies from the acquired assets are expected to provide steady cash inflow to the partnership, thereby meeting its fund requirements for distribution payment and growth projects.
Currently, Plains All American carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Enbridge Energy Partners, L.P. EEP, Enbridge Energy Management LLC EEQ and NuStar Energy L.P. NS. All of them sport a Zacks Rank #1 (Strong Buy).
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