2 months ago
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Matt DiLallo, The Motley Fool
Tue, July 21, 2026 astatine 7:35 AM CDT 4 min read
With a much than 8% yield, Western Midstream Partners (NYSE: WES) should beryllium hard to ignore. However, it doesn't person arsenic overmuch affirmative sum connected Wall Street arsenic different maestro constricted partnerships (MLPs). As a result, it's flying nether the radar of astir investors.
Here's a look astatine wherefore you won't privation to disregard this high-yielding MLP.
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Underfollowed and unloved
Fourteen Wall Street analysts presently screen Western Midstream Partners. Only 4 person a "buy" standing connected the MLP, portion 9 complaint it a "hold" and 1 has a "sell" rating. For comparison, 21 analysts presently screen some Energy Transfer (NYSE: ET) and Enterprise Products Partners (NYSE: EPD). They're precise bullish connected Energy Transfer (five "strong buys" and 14 "buy" ratings) and moderately bullish connected Enterprise Products Partners (two "strong buys" and 8 "buys").
There are galore reasons less analysts screen this MLP. It's not arsenic large oregon arsenic diversified arsenic Energy Transfer oregon Enterprise Products Partners. Western Midstream besides has important ties to 1 company: Occidental Petroleum. The lipid elephantine is its apical unitholder (39.5% of its communal units) and largest lawsuit (55% of its gross successful 2025, falling to 47% successful 2026). These and different factors are starring immoderate Wall Street analysts to wholly disregard the company.
What Wall Street is missing
For the astir part, Wall Street analysts absorption connected maturation implicit income. As a result, they thin to miss retired connected the full instrumentality imaginable of immoderate higher-yielding stocks.
Western Midstream's basal instrumentality comes from its high-yielding distribution. At implicit 8%, the MLP offers a higher currency output than Enterprise Products Partners (5.8% existent yield) and Energy Transfer (6.6%). That high-yielding payout is connected a rock-solid foundation. It generates unchangeable currency flows backed by long-term, fee-based contracts with Occidental Petroleum and third-party customers. The MLP presently expects to nutrient betwixt $1.9 cardinal and $2.1 cardinal of distributable currency travel this year, easy covering its $1.5 cardinal yearly organisation outlay. It besides has a coagulated investment-grade equilibrium expanse backed by a debased 3.1 times leverage ratio.
That gives the MLP the fiscal flexibility to turn its operations done bolt-on acquisitions and integrated maturation superior projects. The institution precocious closed its $1.6 cardinal acquisition of Brazos Delaware, which strategically expands its operations successful a halfway area, further diversifies its gross distant from Occidental, portion instantly boosting its currency travel per unit. The MLP besides has respective integrated enlargement projects underway, including the Loving II state processing works and Pathfinder Pipeline, some of which volition participate commercialized work aboriginal adjacent year. Western expects its maturation drivers to substance semipermanent adjusted net earlier interest, taxes, depreciation, and amortization (EBITDA) maturation of 4% to 5% per year. That should enactment continued yearly organisation maturation successful the low-to-mid single-digits.
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