Our analysis is based on comparing Western Gas Equity Partners LP with the following peers – Williams Companies, Inc., Kinder Morgan Inc Class P, Enterprise Products Partners L.P., Enbridge Energy Partners, L.P. Class A, Anadarko Petroleum Corporation, Tallgrass Energy Partners LP and TransCanada Corporation (WMB-US, KMI-US, EPD-US, EEP-US, APC-US, TEP-US and TRP-US).
Western Gas Equity Partners LP’s dividend yield is 5.19 percent and its dividend payout is 116.89 percent. This compares to a peer median dividend yield of 4.54 percent and a payout level of 122.62 percent. This relatively higher dividend yield and lower payout ratio makes the company a good candidate for dividend investors looking at this peer group. The downside is the company’s relatively low dividend quality score of 25 out of a possible score of 100.
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2017), WGP-US paid a medium quality dividend, which represents a yield of 4.96% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during 4 of these years — of these 2 were medium quality and 2 were low quality.
- The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
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Over the last twelve months (prior to September 30, 2017), WGP-US paid a medium quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 2.18x), investing cash flow (coverage of -1.42x), issuance cash flow (coverage of 0.26x) and twelve-month prior cash (coverage of 0.35x), for a total dividend coverage of 1.36x.
WGP-US’s issuance cash flow includes outflows from net share buybacks (coverage of -0.00x). Thus, the total coverage including share buybacks is 1.36x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s net cash inflow from issuance was required (in addition to operating and investment cash) to pay the dividend, which suggests a medium dividend quality.
|Dividend Yield (%)||0||1.58||1.73||3.86||4.03||5.19|
|Dividend Payout (%)||0||88.15||102.33||358.97||111.68||116.89|
A complete list of metrics and analysis is available on the company page.
Western Gas Equity Partners LP operates as a master limited partnership, which aims to own three types of partnership interests in Western Gas Partners, LP and its subsidiaries (WES). WES engages in the business of gathering, processing, compressing, treating, and transporting natural gas, condensate, natural gas liquids, and crude oil for Anadarko, as well as third-party producers and customers. The company was formed in September 2012 and is headquartered in The Woodlands, TX.
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