PAGP pays tax deferred dividends

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

PAGP pays tax deferred dividends

Post by dan_s »

PAGP is in our High Yield Income Portfolio.
> It is the general partner of Plains All American Pipeline (PAA), which is a Master Limited Partnership.
> PAGP is a C-Corp., but as you can see in the paragraph below, their dividends an non-taxable return of capital. So, best suited for a taxable account.
> PAGP closed at $13.04 on January 20. Dividends are now $1.07/year for tax free yield of 8.2%.
> PAA and PAGP have announced plans to increase dividends by 15% per year starting in 2024.

HOUSTON, Jan. 09, 2023 (GLOBE NEWSWIRE) -- Plains All American Pipeline, L.P. (Nasdaq: PAA) and Plains GP Holdings (Nasdaq: PAGP) today announced their quarterly distributions with respect to the fourth quarter of 2022.

PAA announced a quarterly cash distribution of $0.2675 per common unit ($1.07 per unit on an annualized basis), which represents a $0.05 increase from the distribution paid in November 2022 ($0.20 per unit increase, or 23%, on an annualized basis). PAGP announced a corresponding quarterly cash distribution of $0.2675 per Class A share ($1.07 per Class A share on an annualized basis), which also reflects a $0.05 increase from the distribution paid in November 2022 ($0.20 per unit increase, or 23%, on an annualized basis). With respect to PAA’s Series A Preferred Units, PAA announced a quarterly cash distribution of $0.525 per Series A Preferred Unit, or $2.10 on an annualized basis. Each of these distributions will be payable on February 14, 2023 to holders of record of each security at the close of business on January 31, 2023.

Although equity holders should consult their own tax advisor regarding their particular circumstances, the PAGP cash distribution per Class A share is expected to be a non-taxable return of capital to the extent of a Class A Shareholder’s tax basis in each PAGP Class A Share and a reduction in such tax basis. In addition, to the extent any cash distribution exceeds a Class A Shareholder’s tax basis, it should be taxable as a capital gain.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: PAGP pays tax deferred dividends

Post by dan_s »

TipRanks: "In the last 3 months, 5 ranked analysts set 12-month price targets for PAA. The average price target among the analysts is $15.60. The 5 price targets range from $14.00 to $20.00."

PAA now has some large capital expenditures in the rear-view mirror. So, they are going to generate a significant increase in free cash flow this year.

Annual Results:

2021A: Revenues of $42,043 million resulted in Net Income of $593 million ($0.92/unit)

2022A: Revenues of $59,089 million resulted in Net Income of $1,313 million ($2.17/unit) < Based on my Q4 forecast.

2023 Forecast: Revenues of $65,000 million should result in Net Income of $2,659 million ($4.16/unit)

My current valuation of PAA is $19.50/unit and my valuation of PAGP is $20.00/share. < Pull up a 5-year chart for PAA and you will see that the last time PAA generated results close to my 2023 forecast, the unit price went over $24/share.
Dan Steffens
Energy Prospectus Group
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