PAA & PAGP for dividends and growth - July 23

[dan_s]

Plains All American Pipeline (PAA) and its General Partner (PAGP) are in our High Yield Income Portfolio. They pay identical quarterly dividends. PAA is an MLP and PAGP is a C-Corp.

There are three main business segments: transportation, facilities, and supply and logistics.

The facilities segment provides storage, terminalling, and throughput services for crude oil, NGLs, and natural gas. It owns and operates approximately 77 million barrels of crude oil storage capacity, 32 million barrels of NGL storage capacity, 63 billion cubic feet of natural gas working capacity, 25 billion cubic feet of base gas, 7 natural gas processing plants, a condensate facility, 8 fractional plants, 33 crude oil and NGL rail terminals and facilities, five marine facilities, and over 1,000 miles of active pipelines.

Plains’ supply and logistics segment purchases crude oil at the wellhead, pipeline, terminal, and rail facilities; stores inventory, natural gas, and NGLs; re-sells or exchanges crude and NGLs; and transports crude and NGLs on trucks, barges, rail cars, pipelines, and other vessels.

On July 6th, Plains announced that its next quarterly distribution of $0.18 per common unit will be paid to us (and any unit holders as of July 31, 2020) on August 14th. Based on the July 22 closing price of $8.09/unit, PAA's annual dividend yield is 8.9%. Starting in 2021, I'm expecting them to increase their quarterly dividends. Based on my forecast, DCF should be over $2.00/unit this year.

On August 4th, the partnership will conduct its next earnings webcast and give us further details on Plains’ second quarter performance, as well as give us information on its capitalization and liquidity, as well as its financial and operating guidance.