Midstream Energy Dividend ETF | June 2024

Midstream Energy Dividend ETF Key Takeaways

North American midstream companies continue to execute well, delivering on free cash flow generation and returns to shareholders. The remainder of MMLP holdings reported earnings for 1Q24 in May, with results largely in-line or ahead of Wall Street forecasts.

North American energy infrastructure corporations and MLPs returned to positive performance in May, as natural gas prices rebounded and 1Q24 earnings results were strong. MMLP’s underlying index, AEDW, rose 3.52% on a net-total-return basis in May, outperforming the broad Energy Select Sector Index (IXE) and the Stoxx Europe 600 Oil & Gas Index (SXEP), which both fell slightly on a total-return basis.

Looking at dividends, a third of portfolio companies increased their payouts for 1Q24 on a sequential basis. Over 89% of AEDW by weighting as of 28 May have grown their dividend in the past year.  Notably, Western Midstream Partners (WES, 2.9% Weight) increased its payout by 52%, and Targa Resources (TRGP, 1.4% Weight) increased its dividend by 50%. As of 31 May, AEDW was yielding 6.5%.

During 1Q24, six MMLP holdings repurchased an aggregate $1.49 billion in common equity, led by Cheniere Energy (LNG, 1.3% Weight), which repurchased $1.2 billion. Other notable repurchases for 1Q24 include TRGP, MPLX (MPLX, 9.7% Weight), and EnLink Midstream (ENLC, 0.7% Weight), which spent $124 million, $75 million, and $50 million, respectively.  Nearly 78% of AEDW by weighting as of 29 May have a buyback authorization in place.

The outlook for the space remains constructive as fee-based business models drive stable free cash flow generation regardless of the commodity price backdrop. With a strong start to the year and solid macro backdrop, companies may be in a position to raise financial guidance as the year progresses. Continued execution may drive a re-rating in equities over time.

Sources available upon request. Data as of 31/05/2024. Please remember that all performance figures are showing net data. Past performance is not indicative of future performance, and when you invest in ETFs your capital is at risk.

Constituent News

Enbridge (ENB CN, 10.4% Weight) announced the inauguration of the Fécamp Offshore Windfarm, France’s first offshore wind farm. The 497-megawatt project was developed by an ENB subsidiary, as well as EDF Renewables, CPP Investments, and Skyborn. ENB holds a 17.9% interest in the project.

Energy Transfer (ET, 9.8% Weight) is acquiring Permian gathering & processing company WTG Midstream for $3.25 billion. The deal expands Energy Transfer’s footprint in the Midland basin of the Permian and includes a 20% interest in the BANGL pipeline, which transports natural gas liquids from the Permian to the Texas Gulf Coast.

ET also signed a Letter of Intent with CapturePoint LLC for a carbon capture, utilization, and sequestration project for CO2 produced from natural gas treatment facilities in the Haynesville in Eastern Texas.

Williams Companies (WMB, 7.8% Weight) reported strong earnings for 1Q24, nearly 10% ahead of Wall Street consensus forecasts, and expects to finish 2024 at the upper end of its previous adjusted EBITDA guidance range.

ONEOK (OKE, 7.4% Weight) is acquiring a natural gas liquids pipeline system spanning Southeast Texas and Western Louisiana for $280 million and plans to connect the network to existing ONEOK infrastructure in Texas.

Pembina Pipeline Corporation (PPL CN, 3.5% Weight) reported 1Q24 results well ahead of consensus estimates, raised its divided by 3.4% sequentially, and renewed its equity repurchase authorization to repurchase up to five percent of its common shares.

 

Midstream Energy Dividend ETF Performance
As of 31.05.2024

1M3M6MYTD12M3YSI
Alerian Midstream Energy Dividend UCITS ETF3.58%7.96%11.10%12.47%30.02%53.18%132.32%
Alerian Midstream Energy Dividend Index (NTR)3.53%8.01%11.16%12.47%29.79%51.13%126.07%

 

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/05/2024

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. When you invest in ETFs and ETCs, your capital is at risk.

This report was written by, and is the opinion of VettaFi, the index provider of the Alerian Midstream Energy Dividend Index, the underlying index of MMLP. VettaFi does not issue, sponsor, endorse, sell, or promote MMLP.

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