Many of the best dividend growth stocks give their investors a raise each year. However, some companies take that to another level by handing their investors more money every single quarter. Three companies with a history of putting more money into their investors' pockets every three months are Shell Midstream Partners (NYSE: SHLX), Western Gas Partners (NYSE: WES), and Valero Energy Partners (NYSE: VLP).
Topped off the tank to continue growing
Shell Midstream Partners is a master limited partnership (MLP) formed by big oil giant Royal Dutch Shell (NYSE: RDS-A)(NYSE: RDS-B) in late 2014 to own, operate, develop, and acquire midstream infrastructure in the U.S. to support its operations. Since that time, Shell has dropped down several assets to Shell Midstream Partners, which has helped grow the MLP's cash flow. That rising income stream has enabled Shell Midstream to increase its distribution to investors each quarter since its formation -- 13 times overall -- including a 20% raise in the last year alone. Currently, the company's payout yields an attractive 6.1%, which it supports with solid financial metrics, including a comfortable 1.1 times coverage ratio in the first quarter.
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That growth streak appears poised to continue, with Shell Midstream expecting to increase its payout by another 20% for 2018. Driving that forecast is the recent acquisition of an interest in the Amberjack Pipeline Company, which at $1.22 billion is the MLP's largest deal to date. That transaction will not only supply the company with more income in the near term, but future growth as volumes ramp up from new expansion projects. Meanwhile, Shell Midstream has plenty of growth potential up ahead since Shell operates several other midstream assets that it can drop down to its MLP in the coming years.
A building boom should keep this dividend growth streak alive
Western Gas Partners, like Shell Midstream, is also an MLP with an oil-producing parent, in this case Anadarko Petroleum (NYSE: APC). That relationship has enabled Western Gas Partners to steadily grow cash flow and its distribution, initially via dropdown acquisitions and more recently from organic expansion projects. Those dual fuels enabled the MLP to increase its payout for 36 consecutive quarters.
At the moment, Western Gas' distribution yields an impressive 7.6%. While the company only covered that payout with cash flow by a tight 1.05 times in the first quarter, it expects coverage to expand to a more comfortable 1.2 times in the second half of the year as expansion projects begin entering services. Overall, the company is undergoing the largest expansion program in its history at up to $1.4 billion, which sets the stage for it to continue increasing the payout each quarter through at least the end of next year. In the meantime, Anadarko still operates a few midstream assets that it could drop down to its MLP, which adds further clarity to Western Gas' growth prospects.
Image source: Getty Images.
All the fuel it needs to keep going
While Valero Energy Partners is also an MLP, its parent, Valero Energy (NYSE: VLO), refines oil as opposed to producing it. However, it still operates similar assets as the other MLPs and has the same growth drivers. The main fuel driving its distribution growth -- which is now up to 13 consecutive quarters -- is a steady diet of acquisitions from Valero.
Currently, Valero Energy Partners yields 5.5%, which the MLP covers with cash flow by a very conservative 1.6 times. Because of that, the company is well positioned to grow its payout 20% this year without needing to make any additional acquisitions from Valero. The refining giant, though, does still have several operating midstream assets that it could drop down to its MLP as well as others currently under construction, leaving plenty of fuel to continue growing Valero Energy Partners' distribution.
Compelling income options
Thanks to their supportive parents, these MLPs have been able to increase their distributions to investors every quarter for the past several years. All of them expect to continue growing those income streams at a healthy rate this year and appear to have plenty of fuel to keep growing in future years. That makes them all worthwhile options for income-seeking investors to consider.
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