Plains GP Holdings, L.P. (PAGP) Update - July 18

[dan_s]

PAGP is a midstream C-Corp. in our High Yield Income Portfolio.

It is the GP of Plains All American Pipeline (PAA) that is a Master Limited Partnership (MLP)

My current valuation for each of them is $18/share. They pay identical quarterly dividends that are $0.2675/quarter or $1.07/year. PAA and PAGP are expected to increase their full year dividends by $0.15 per year for at least the next three years. If you are OK with owning MLPs, then PAA is for you because it has a higher yield.

PAA is extremely free cash flow positive because several major capital projects were completed during the last three years. For 2023 PAA's Capex budget is just $520 million, which compares to my operating cash flow forecast of $2,686 million.

Distributable Cash Flow (DCF) was $2.26/share for the year 2022 and $0.62/share for Q1 2023. DCF is expected to increase each quarter through at least 2024, so they have a lot of room for dividend increases.

For "Growth & Income" PAA and PAGP get A+ ratings.

TipRanks: "In the last 3 months, 7 ranked analysts set 12-month price targets for PAA. The average price target among the analysts is $17.71. Three analysts sent updated price targets to TipRanks in July of $16, $19 and $22."