This Stock with Over 7% Dividend Yield is Making $670 Million in Acquisitions to Propel Sizable Dividend Enhancement by 2025

This Stock Yielding Over 7% in Dividends is Initiating $670 Million Worth of Purchases to Bolster Substantial Payment Increase by 2025

Plains All American Pipeline: This oil pipeline company is currently offering investors a substantial income opportunity with its high distribution yield of over 7%, far surpassing the S&P 500's 1.2% dividend yield. The company recently sealed several deals to boost its cash flow, aiming to enhance its distribution by 20% this year.

Expansion Spree

Plains All American Pipeline is making waves in the market with its acquisition plans. Here are three major transactions:

Ironwood Midstream Energy: Plains is purchasing Ironwood for approximately $475 million. With this acquisition, the company will acquire Ironwood's Eagle Ford Basin gathering system, bolstering its presence in this crucial oil production region in the United States.
Medallion Midstream’s Delaware Basin Assets: Plains is snapping up Medallion Midstream’s Delaware Basin crude oil gathering business for around $160 million. This purchase will augment the company’s crude oil gathering capabilities in the Delaware Basin.
Midway Pipeline LLC: Plains has acquired the remaining 50% interest in Midway Pipeline LLC from a subsidiary of CVR Energy for approximately $90 million. This acquisition secures Plains' control over strategic assets.

CEO Willie Chiang has expressed his excitement about these acquisitions, noting that they are an "excellent strategic fit for Plains." These deals will enlarge Plains' crude oil footprint in the Permian, Eagle Ford, and Mid-Continent regions, providing significant value to investors.

Boosting Income Stream

Plains All American Pipeline's acquisitions and capital structure adjustments are setting the stage for notable financial gains. In 2025, the company is aiming to boost its distribution by 20%. To achieve this, it has planed to:

Acquire approximately 12.7 million units, or 18%, of its outstanding Series A Preferred Units for around $330 million. This transaction will lower the cash distributions paid to preferred investors, benefiting Plains' unitholders.

These strategic acquisitions and capital structure adjustments will drive immediate value for investors by increasing earnings, distributable cash flow, and improving financial flexibility. As a result, Plains All American Pipeline is well-positioned to deliver sustainable earnings and distributions to its investors.

Transforming into a Growth Machine

Over the past few years, Plains All American Pipeline has made significant strides in bolstering its financial performance. With a lower leverage ratio and a compound annual revenue growth rate of 8%, the company has the means to provide a growing income source to its investors. Plains aims to continue this trend by pursuing a balanced growth strategy, including organic expansion, bolt-on acquisitions, and capital optimization.

Organic Expansion

Plains plans to invest $300 million to $400 million annually in high-return organic expansion projects. These projects will contribute additional earnings to the company, allowing it to continue distributing increased dividends to its investors.

Streamlined Operations

Existing tariff increases, higher utilization rates, market opportunities, and cost controls will help improve the profitability of Plains' assets, leading to incremental income.

Bolt-on Mergers and Acquisitions (M&A)

Plains expects to continue making accretive bolt-on acquisitions as opportunities arise. The company has a robust opportunity to buy assets from private equity funds, existing joint venture partners, and other midstream companies.

Capital Optimization

Plains entered the year with approximately $2.6 billion of preferred units that it could repurchase or refinance. By repurchasing or refinancing these units, Plains can reduce future cash distributions to these investors, improving its financial flexibility and dividend distribution capacity.

These initiatives, paired with a conservative payout ratio, ensure continuous distribution increases for Plains All American Pipeline.

A High-Yield Investment Option

Plains All American Pipeline provides investors with a lucrative income stream that is growing rapidly. With its strategic moves to acquire assets and optimize its capital structure, Plains All American Pipeline is well-positioned to continue growing its distribution and delivering attractive returns for its investors.

[1] PRODUCT AND EXPERIENCE PRESENTATION. (2024, December 6). Retrieved from [Link to Webpage Name 1][2] Plains All American Pipeline Announces Fourth Quarter 2024 Distributions and Provides 2025 Guidance. (2024, December 5). Retrieved from [Link to Webpage Name 2][3] Plains All American Pipeline Reports Third Quarter 2024 Results. (2024, October 26). Retrieved from [Link to Webpage Name 3][4] Q3 2024 Results – Plains All American Pipeline, L.P. (2024, October 26). Retrieved from [Link to Webpage Name 4]

Plains All American Pipeline's acquisition of Ironwood Midstream Energy for $475 million will not only bolster its presence in the Eagle Ford Basin but also provide a substantial financial boost, as this region is a crucial oil production area in the United States.

With its strategic acquisitions and capital structure adjustments, Plains All American Pipeline is looking to significantly increase its distribution to investors by 20%, aiming to deliver sustainable earnings and distributions in the future.