Understanding the Dividend Profile of Western Midstream Partners LP
Western Midstream Partners LP (WES, Financial) recently announced a dividend of $0.88 per share, payable on 2024-05-15, with the ex-dividend date set for 2024-04-30. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Western Midstream Partners LP's dividend performance and assess its sustainability.
What Does Western Midstream Partners LP Do?
Western Midstream Partners LP is a US-based company which owns, operates, acquires, and develops midstream energy assets. The company, through its subsidiary, is engaged in the business of gathering, processing, compressing, treating, and transporting natural gas, condensate, NGLs, and crude oil. It owns or has investments in assets located in the Rocky Mountains (Colorado, Utah, and Wyoming), the Mid-Continent (Kansas and Oklahoma), North-central Pennsylvania, and Texas.
A Glimpse at Western Midstream Partners LP's Dividend History
Western Midstream Partners LP has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Western Midstream Partners LP's Dividend Yield and Growth
As of today, Western Midstream Partners LP currently has a 12-month trailing dividend yield of 7.14% and a 12-month forward dividend yield of 9.72%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Western Midstream Partners LP's annual dividend growth rate was 17.10%. Extended to a five-year horizon, this rate decreased to -1.90% per year. And over the past decade, Western Midstream Partners LP's annual dividends per share growth rate stands at 8.40%.
Based on Western Midstream Partners LP's dividend yield and five-year growth rate, the 5-year yield on cost of Western Midstream Partners LP stock as of today is approximately 6.49%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Western Midstream Partners LP's dividend payout ratio is 0.92, which may suggest that the company's dividend may not be sustainable.
Western Midstream Partners LP's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Western Midstream Partners LP's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Western Midstream Partners LP's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Western Midstream Partners LP's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Western Midstream Partners LP's revenue has increased by approximately 8.30% per year on average, a rate that underperforms approximately 64.53% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Western Midstream Partners LP's earnings increased by approximately 1.60% per year on average, a rate that underperforms approximately 70.87% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.90%, which underperforms approximately 67.55% of global competitors.
Next Steps
When considering the future of Western Midstream Partners LP's dividend payments, investors should weigh the company's consistent dividend history against the potentially unsustainable payout ratio. While the dividend growth rate is promising, the growth metrics present a mixed picture, with revenue growth underperforming many competitors. Still, the profitability rank and positive net income offer some reassurance. Investors must decide if Western Midstream Partners LP's current yield and historical dividend growth are worth the risks presented by its payout ratio and growth metrics. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
