Phillips 66 Partners LP’s (PSXP - Free Report) board of directors recently announced an increase in quarterly cash distribution for fourth-quarter 2019. It increased distribution to 87.5 cents per unit from 86.5 cents in the third quarter, representing an increase of 1.2% sequentially and 4.8% year over year.
Following the hike, the partnership’s new annualized distribution amounted to $3.50 per unit, representing a distribution hike of 5.6%. This revised distribution is likely to be paid on Feb 13, 2020 to unitholders of record on Jan 31.
Should You Take Advantage of the Hikes?
The partnership’s strong financial position and operational strength allow it to raise distributions and fund organic growth opportunities. The latest hike marks the partnership’s 25th successive quarter of distribution increase since its initial public offering in 2013.
Investors should note that consistent distribution hikes by Phillips 66 Partners is indicative of stable fee-based revenues from its extensive midstream infrastructure that includes pipeline networks transporting raw crude, refined petroleum products and natural gas liquids.
The partnership is most likely to continue the trend of increasing cash distributions, since it has a solid backlog of organic growth projects. It has several significant projects in its kitty, which are anticipated to be operational in the next few years. In 2020, the partnership plans to bring online three more organic projects, comprising Sweeny to Pasadena products expansion, South Texas Gateway Terminal and Clemens Caverns expansion.
Fourth-Quarter Earnings Estimates
Houston, TX-based Phillips 66 Partners — formed by Phillips 66 (PSX - Free Report) — is scheduled to report fourth-quarter 2019 results on Jan 31. The Zacks Consensus Estimate for the partnership’s fourth-quarter earnings is pegged at 99 cents, indicating a decrease of 9.2% from the year-ago reported figure.
In the past year, Phillips 66 Partners has gained 29.6% compared with 5.2% growth of the industry it belongs to.
Zacks Rank and Stocks to Consider
Phillips 66 Partners currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy sector include Chevron Corporation (CVX - Free Report) and Murphy USA Inc. (MUSA - Free Report) . While Chevron carries a Zacks Rank #1 (Strong Buy), Murphy has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chevron’s bottom line for 2020 is expected to rise 5.5% year over year.
Murphy’s bottom line for 2020 is expected to rise 2.6% year over year.
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