- It has been a while since providing an analysis on DCP Midstream with their distributions previously being determined risky during the middle of 2020 and the Covid-19 economic downturn.
- Fast forward to early 2021 and sadly their high distribution yield of almost 7% still appears risky.
- Their earnings guidance sees their 2021 results slipping back between 5% and 10% below their results for 2020, but, thankfully, their distribution coverage should still remain very strong.
- The problem emerges with their financial position that has a problematic combination of very high leverage and weak liquidity.
- Whilst this may be a semi-controversial view in light of their recent rallying unit price, these fundamentals make for risky distributions and thus my neutral rating is maintained.
For further details see:
DCP Midstream: Sorry, But That 7% Yield Is Still Fundamentally Risky