Genesis Energy, L.P. (GEL) has raised distributions 30 quarters in a row, including through the financial crisis, and is proving to be a solid midstream MLP play with its dividend payouts, well-placed assets and solid balance sheet, says John Edwards, Director and Senior Equity Research Analyst at Credit Suisse Group.
“Our thesis for the last year or so, maybe even longer, has been to overweight the oily-related infrastructure names…GEL is levered to the oil infrastructure thesis. Its assets are very well-placed because they’re along the Gulf Coast, and they have a very solid balance sheet — low leverage, very high distribution coverage and high visibility in terms of capital projects,” Edwards said.
Genesis Energy currently has the highest capital project visibility since Edwards started covering the stock four or five years ago, and GEL‘s consistently raised distributions indicate that the company will be a continuous solid play in the midstream area, Edwards says.
“They’ve raised the distribution something like 30 quarters in a row, including through the financial crisis; it’s been averaging over 10% annually, and the lowest increase it ever experienced was still over 8% year over year,” Edwards said.
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