The midstream sector has undergone several changes in recent years. Companies used to have no problem obtaining cheap outside financing to expand their operations. However, given the continued challenges of the oil market, it's much more expensive to fund projects these days. That's forced the sector to shift its approach.
One way pipeline companies have done that is by forming partnerships to develop projects so they can share the costs and improve returns. Oil infrastructure-focused master limited partnership Plains All American Pipeline (NYSE: PAA) is one of several companies in the sector to embrace this strategy to develop new projects. The company recently unveiled its latest partnership, this time with Holly Energy Partners (NYSE: HEP), to build a new pipeline and storage terminal in Oklahoma. That project, once completed, will give both companies more fuel to potentially increase their already high-yielding dividends.
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