Plains All American Pipeline LP (PAA) continues with its strategy to pay incremental cash distribution to its unitholders. The partnership has increased its quarterly cash distribution rate by 2.5% sequentially and 9.3% year over year to 61.50 cents per unit. The new distribution rate will be paid on Feb 14, 2014, to unitholders of record as of Jan 31.
The hike in the distribution rate is in line with Plains All American Pipeline’s strategy of increasing the 2014 distribution rate by 10% year over year.
The partnership’s strategy of paying a regular cash distribution and increasing the same at regular intervals reflect its commitment to enhance long-term value for unitholders. Plains All American Pipeline has been increasing its distribution rate almost every year since 1999. The partnership increased its quarterly distribution to limited partners in 37 out of the past 39 quarters and consecutively in each of the last 18 quarters.
Plains All American Pipeline’s cash flow from operating activities during the first nine months of 2013 was $1.6 billion. A strong financial position enables the partnership to meet anticipated cash requirements for its distribution payment and for future growth projects.
Plains All American Pipeline plans to invest $1.6 billion in 2013 for several projects including the Cactus pipeline and the Western Oklahoma Extension pipeline projects. In addition, the partnership is expanding its operations in the Eagle Ford area and Permian Basin. These initiatives would add to the partnership’s profitability in the long run, which in turn will enable it to provide higher returns to its unitholders.
Plains All American Pipeline currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the same sector include Athlon Energy Inc. (ATHL), Harvest Natural Resources Inc. (HNR) and Devon Energy Corporation (DVN). While Athlon Energy and Harvest Natural Resources carry a Zacks Rank #1 (Strong Buy), and Devon Energy holds a Zacks Rank #2 (Buy).
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