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Plains Increases Rates Again - Analyst Blog
1/8/2013 3:20:00 PM
Plains All American Pipeline LP ( PAA ) continues to share more benefits with its unitholders through consistent increases in the cash distribution rate. The partnership announced a new quarterly cash distribution rate of 56.25 cents per unit on all of its outstanding limited partner units.
The partnership has a long history of increasing distributions to unitholders. With the latest distribution, Plains has hiked the quarterly distribution to limited partners in 33 out of the past 35 quarters and consecutively in each of the past 14 quarters.
The new distribution reflects 3.7% growth over the quarterly distribution of 54.25 cents per unit paid in November 2012 and 9.8% growth from the quarterly distribution of 51.25 cents per unit paid in February 2012. It will be paid on February 14, 2013, to unit holders of record as of February 1, 2013.
The partnership is consistently posting strong results backed by organic growth as well as contribution from its acquired assets. Strong financial results enable Plains to increase distribution rates consistently.
Plains has provided earnings surprises consistently in the preceding nine quarters and is optimistic about maintaining its growth momentum in the forthcoming quarters. The partnership now targets cash distribution rate of 9% to 10%, up from the prior expectation of 7% to 8%, for 2013.
Plains' cash distribution depends 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 cash distribution even when it is incurring losses.
Enterprise Products Partners LP ( EPD ), a Plains All American peer, also increased its quarterly cash distribution rate in October 2012. The increased quarterly distribution of 65 cents per unit, paid in November 2012, represented growth of 2.4% over the quarterly distribution of 63.50 cents per unit paid in August 2012 and an increase of 6.1% from the quarterly distribution of 61.25 cents per unit paid in November 2011.
Plains All American Pipeline currently retains a Zacks #1 Rank, (Strong Buy). Another pipeline operator we like -- Sunoco Logistics Partners LP ( SXL ) -- currently has a Zacks #2 Rank ( Buy).
Houston, Texas based Plains All American 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 has 3,800 employees and is also involved in the development and operation of natural gas storage facilities.
ENTERPRISE PROD (EPD): Free Stock Analysis Report
PLAINS ALL AMER (PAA): Free Stock Analysis Report
SUNOCO LOGISTIC (SXL): Free Stock Analysis Report
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