Next week we start a new month and more importantly for stock investors, a new quarter. Income-focused investors can look forward to a new round of dividend announcements and payments.
A number of the companies in the energy infrastructure sector make dividend announcements in the early days of a new quarter, weeks before they report earnings for the quarter. Dividend announcements with dividend increases are “real” news that can give a nice boost to share prices.
Energy infrastructure, also called midstream services, was until a few years ago almost exclusively populated by companies organized as master limited partnerships (MLPs).
The energy sector from upstream, through midstream, to downstream went through a severe bear market in 2015-2016 after the price of crude oil crashed down to less than $30 per barrel. The midstream sector was forced into significant financial restructuring, which included numerous dividend cuts, or at least a suspension of dividend growth.
The restructuring in the sector is now complete. The midstream group is no longer exclusively K-1 reporting MLPs. There is close to an equal number of corporations or limited partnerships reporting tax information on IRS Form 1099.
Of more impact to your brokerage account, the days of dividend cuts are over and many companies in the sector have resumed dividend growth.
One appealing factor is that a lot of the companies have policies of increasing the dividend every quarter. It’s nice to see your investment income growing each and every quarter.
Here are three energy infrastructure stocks that will likely announce dividend increases in the early days of July.
The new Cactus II pipeline will start transporting oil from the basin in the third quarter. Capacity on the Cactus II will ramp up to 670,000 barrels per day. Plains cut its dividend rate in both 2016 and 2016.
Earlier this year, management announced the financial restructuring was complete and increased the dividend by 20%. I expect 5% to 8% annual dividend growth going forward with quarterly increases.
The next dividend announcement should come within the first week of July.
PAA yields 6.0%.
Enterprise is one MLP that was able to continue to grow its distributions through the energy sector bear market. The next dividend increase will be the 60th consecutive boost to the payout.
The next, higher distribution will be announced in the first third of July. Look for a 1% increase.
EPD currently yields 6.0%.
TGE is a 1099 reporting publicly traded partnership. The merger became official one year ago.
Tallgrass has increased its dividend every quarter, with a lot of variability in the size of the increase. Recent increases have been in the 2% to 3% range.
Expect the dividend announcement in the week after the 4th of July long holiday weekend.
TGE yields 9.5%.
Free report details a dividend stock that pays out 14x per year [+2 Bonus Stocks].
Best stock to own in 2019.
This article by Tim Plaehn, was originally published at InvestorsAlley.com.
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