Plains All American Pipeline LP
) upheld its practice of sharing more benefits with its unitholders
by increasing the cash distribution rate once more. This
distribution incidentally is the first one after the unit split.
The partnership announced a new quarterly cash distribution rate of
54.25 per unit on all of its outstanding limited partner units.
The partnership has a long history of increasing distribution to
unitholders. With this, the distribution rate climbed for the 13th
straight quarter. Plains has also hiked the quarterly distribution
to limited partners in 32 out of the past 34 quarters.
The new distribution reflects 1.9% growth over the quarterly
distribution of 53.25 per unit paid in August 2012 and 9.0% growth
from the quarterly distribution of 49.75 cents per unit paid in
November 2011. This distribution will be paid on November 14, 2012,
to unitholders of record as of November 2, 2012. The previous
distribution rates are adjusted for the recently concluded
two-for-one unit split.
Plains' cash distributions depend primarily on cash flow that
includes cash flow from financial reserves and working capital
borrowings. The cash distribution does not solely depend on
profitability, which can be affected by non-cash items. Hence, the
partnership can sustain its cash distribution even when it is
Plains reported strong second quarter results which surpassed
the year-ago performance as well as our expectation. The
partnership is optimistic about maintaining its growth momentum for
the remainder of the year and expects to share more with
unitholders by increasing the distribution rate by 8% to 9% in
2012. We believe the partnership is presently on track to meet its
expected distribution growth.
Enterprise Products Partners LP
), a Plains All American peer, also increased its quarterly cash
distribution rate in July 2012. The increased quarterly
distribution of 63.50 cents per unit, paid in August 2012,
represented growth of 4.9% over the quarterly distribution of 60.50
per unit paid in August 2011 and an increase of 1.2% from the
quarterly distribution of 62.75 cents per unit paid in May
Plains All American Pipeline currently retains a short-term
Zacks #3 Rank (Hold rating). The partnership competes with
Enterprise Products Partners LP and
Sunoco Logistics Partners L.P.
) among others.
Houston, Texas-based Plains All American Pipeline is engaged in
the transportation, storage, terminalling and marketing of crude
oil, refined products and liquefied petroleum gas and other natural
gas related petroleum products. The partnership is also involved in
the development and operation of natural gas storage
ENTERPRISE PROD (EPD): Free Stock Analysis
PLAINS ALL AMER (PAA): Free Stock Analysis
SUNOCO LOGISTIC (SXL): Free Stock Analysis
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