ICA’s Commentary
Enterprise Products Partners L.P. (NYSE: EPD) (“Enterprise”) announced on July 7, 2022, that the board of directors of its general partner declared the quarterly cash distribution paid to limited partners holding Enterprise common units with respect to the second quarter of 2022 of $0.475 per unit, or $1.90 per unit on an annualized basis. This distribution represents a 5.6 percent increase over the distribution declared with regard to the second quarter of 2021.
This is an example of a corporate action that supports our view that midstream free cash flow has progressively grown. Many midstream companies implemented measures during the previous quarters to protect their balance sheets with cost-saving initiatives and cancellations or reductions to capital spending. Companies have transitioned to paying down debt and, in the case of larger midstream companies, instituted share buybacks or dividend increases as a way to return cash opportunistically. Shareholders of midstream energy companies benefit from share repurchases and incremental dividend increases. We believe these activities by management will help midstream companies successfully operate during periods of volatile energy prices.
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DISCLOSURE
The information contained herein represents our subjective belief and should not be construed as investment advice. The information and opinions provided should not be taken as specific advice on the merits of any investment decision. Investors should make their own decisions regarding any investments mentioned, and their prospects based on such investors’ own review of publicly available information and should not rely on the information contained herein. Infrastructure Capital Advisors, LLC nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein. This article includes information based on data and calculations sourced from Bloomberg and index constituents in the Alerian MLP Index. We believe that the data is reliable, we have not sought, nor have we received, permission from any third-party to include their information in this article. Many of the statements in this article reflect our subjective belief.