The recent plunge, however, has clearly spread well beyond those companies. This isn’t necessarily a good thing or a bad thing, it’s just a fact of the matter and the current state of the industry.

This copy is for your personal, non-commercial use only. The Alerian MLP ETF (NYSE Arca: AMLP) declared its third quarter 2020 distribution of $0.75 on Wednesday, August 12th. Notably, Crestwood Equity Partners (CEQP) increased its 4Q19 distribution by 4.2% sequentially after keeping its distribution flat at $0.60/unit following a cut in April 2016. However, if you originally owned ETP equity before the merger, your post-merger distribution payout decreased. Additionally, with midstream companies approaching a free cash flow inflection point, particularly in 2021, it’s possible that excess cash flow will drive further dividend growth. )+[a-z]{2,})$/i, failureMessage: "A valid email address is required"});var dom2 = document.querySelector('#form1783 #field2');var field2 = new LiveValidation(dom2, {validMessage: "", onlyOnBlur: false, wait: 300});field2.add(Validate.Presence, {failureMessage:"This field is required"});var dom11 = document.querySelector('#form1783 #field11');var field11 = new LiveValidation(dom11, {validMessage: "", onlyOnBlur: false, wait: 300});field11.add(Validate.Custom, {against: function(value) {return !value.match(/(telnet|ftp|https?):\/\/(?:[a-z0-9][a-z0-9-]{0,61}[a-z0-9]\.|[a-z0-9]\. Looking at the chart above, which shows the weighted-average annual distribution growth of the Alerian MLP Index (AMZ), you’ll see that it is starting to look like an industry trend. Several midstream companies are guiding to solid 2020 dividend growth.

Because they tend to sign longer-term contracts, MLPs are relatively safer than companies whose fortunes fluctuate based on the day-to-day price of oil. And if they cut by 75%, they would yield 4.6%, which would “represent premiums to REITs, utilities, and bonds,” she wrote earlier this month.

While KMI is technically no longer an MLP, its underlying businesses and cash flows are still very MLP-like.

Since then, it has become clearer that energy infrastructure investors are more defensive in their nature, valuing cash flow and balance sheet stability over distribution growth. MarketBeat does not provide financial advice and does not issue recommendations or offers to buy stock or sell any security.

#TradeTalks: Is it time for value stocks to shine on the other side of the election? Yet companies in the sector may be in better shape than their prices indicate. In 1Q19, Plains All American (PAA) announced a 20% distribution increase in conjunction with the conclusion of its deleveraging plan after cutting its distribution twice in the past. Featured Slideshows: Warren Buffett Dividend Stocks Best Dividend Stocks 2000-2020 When oil and gas prices fall, the companies with the most to lose tend to be producers. After six quarters of not paying out any distribution, they were able to reinstitute it at $0.25/quarter in 2010. “Additionally, keep in mind that MLP distributions are typically tax advantaged.”.

On July 19, 2017, Kinder Morgan announced that it expects a 60% dividend increase for 2018 and 25% annual dividend growth from 2018 through 2020. Because they tend to sign longer-term contracts, MLPs are relatively safer than companies whose fortunes fluctuate based on the day-to-day price of oil. It also has a special tax structure that keeps it from having to pay taxes on the corporate level. The outsized dividend growth marks a recovery from KMI’s 2015 dividend cut. I would like to receive Nasdaq communications related to Products, Industry News and Events.You can always change your preferences or unsubscribe and your contact information is covered by our Privacy Policy. “This 50% distribution reduction results in $325 million of cash that will be fully utilized to reduce leverage and strengthen the balance sheet,” the Denver-based company said. Because she works for an index provider, Morris doesn’t recommend individual stock names, but she did explain that bigger names are more insulated at a time like this. Cuts to its capital expenditures will also free up cash, it added. MarketBeat does not provide financial advice and does not issue recommendations or offers to buy stock or sell any security. Learn about financial terms, types of investments, trading strategies and more. Of course, a few names break the mold due to a recent cut (ENLC) or guidance to maintain the dividend (EQM, ETRN). “The key point is that’s not our base-case scenario. One of the first energy infrastructure companies to cut distributions, yet be rewarded for their actions, was Kinder Morgan (KMI). With many investors using energy infrastructure in income portfolios, the outlook for dividends (or distributions for MLPs) comes up in almost every investor conversation.

While it wasn’t obviously called a “distribution cut”, functionally it had the same effect.

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Enbridge Energy Partners (EEP) also completed a strategic review and its board recommended a 40% distribution cut. EnLink Midstream (ENLC) announced a 33.7% distribution cut for 4Q19 and expects to maintain its distribution through 2020. When overall oil and gas activities slow, their customers no longer need their services. Many midstream companies have not provided guidance for 2020 dividend growth but raised their payout with their latest dividend announcement. After growing its dividend by 25% in 2019, Kinder Morgan (KMI) is planning another 25% increase in 2020, which would bring its dividend up to $1.25 per share on an annualized basis. “The key point is that’s not our base-case scenario. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com. The Changing Times However, in recent years, distribution cuts have been perceived differently.

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