Hess Midstream LP Boosts Distribution Per Share: A Win for Investors
Monday, Jan 27, 2025 4:28 pm ET
4min read 
Hess Midstream LP (NYSE: HESM) has announced a significant increase in its distribution per share, marking a positive development for investors. The company's Board of Directors declared a quarterly cash distribution of $0.6846 per Class A share for the quarter ended December 31, 2024, representing a 2.5% sequential increase and putting the company well above its targeted 5% annual growth rate. This increase was made possible by the company's accretive $100 million unit repurchase in September 2024, which utilized excess adjusted free cash flow available for distributions.
The new quarterly distribution of $0.6846 per Class A share represents a 2.5% sequential increase and puts the company well above its targeted 5% annual growth rate. This increase was made possible by the company's accretive $100 million unit repurchase in September 2024, which utilized excess adjusted free cash flow available for distributions.
Jonathan Stein, Chief Financial Officer of Hess Midstream, stated, "We continue to execute on our differentiated financial strategy, prioritizing consistent and ongoing return of capital to our shareholders. With today’s announcement, we have once again utilized our excess adjusted free cash flow beyond our growing distributions to provide further return of capital to our shareholders. Through a combination of our 5% targeted growth in annual distributions per Class A share and incremental increases in our quarterly distributions following unit repurchases, we have increased our distribution per Class A share by over 50% since the first quarter of 2021 and by over 10% in 2024 year to date on an annualized basis. We expect to continue to have more than $1.25 billion of financial flexibility through 2026 that can be used to support our return of capital framework, including potential additional and ongoing unit repurchases that could support further distribution per share level increases."
The increased distribution per share has a positive impact on Hess Midstream LP's targeted 5% annual distribution growth rate through 2026. The company's financial flexibility positions it well to continue delivering consistent returns to shareholders in the future. The combination of buybacks and growing distributions creates a compelling total return proposition for income-focused investors.
In conclusion, Hess Midstream LP's announcement of a distribution per share level increase is a win for investors. The company's commitment to consistent and ongoing return of capital, combined with its financial flexibility, positions it well to continue delivering strong returns to shareholders. As an investor, it's essential to stay informed about developments like these and consider the potential implications for your portfolio.
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