Western Midstream Partners

WES

Market cap $17.3B

Energy remains a top investment focus due to global demand, constrained supply growth, and attractive sector valuations versus the S&P 500. I highlight my preferred picks across the energy supply chain: LandBridge, Viper Energy, Helmerich & Payne, Diamondback Energy, Western Midstream, and Marathon Petroleum. VNOM offers high cash returns to shareholders, while WES and MPC provide strong yields and capital return strategies, each excelling in their respective niches.

Western Midstream Partners, LP, offers an attractive distribution growth profile for income-focused investors. I see WES's value underpinned by robust core natural gas business growth, expanding pipeline assets, and strong projected natural gas demand. The recent $1.6B Brazos Delaware acquisition expands WES's Delaware Basin footprint by ~49% (to over 1.4M acres), adding significant pipeline and processing capacity.

MLPs remain highly attractive for income investors due to defensive cash flows, CPI-linked contracts, and yields averaging ~7.5%. Recent MLP price surges do not signal overvaluation; current valuations are not detached given sector fundamentals and macro risks. MLPs have deleveraged, consolidated, and now benefit from higher inflation expectations and a flight-to-quality dynamic.

Key Takeaways: On a year-over-year basis, 96.0% of the Alerian Midstream Energy Index (AMNA) by weighting have grown their dividends. MLPs largely drove sequential growth in payouts for 1Q26, while most corporations kept their dividends steady.

Western Midstream Partners, LP delivered robust Q1 2026 results, with revenue up 22.4% YoY to $1.12B and strong operational expansion. Despite recent price rallies and technical overbought signals, WES's earnings growth outpaces price gains, supporting a justified valuation and a buy rating. WES offers an attractive dividend yield above 8%, backed by solid liquidity, manageable debt maturities, and resilient cash flows.

Western Midstream Partners offers an 8.35% yield, 5-8% targeted distribution growth, and a compelling risk-adjusted return at $45 per unit. WES's Q1 results were strong, with a record $683.1M adjusted EBITDA, 15% YoY growth, and a 2.2% distribution increase. The $1.6B Brazos Delaware acquisition expands WES's Delaware Basin footprint by 50%, is immediately accretive, and maintains pro forma leverage near 3.0x.

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Energy Transfer is one of the most attractive stocks in the energy space. Enterprise Products is a sleep-well-at-night stock with a proven track record.

WES Q1 earnings top estimates as higher natural gas, crude oil and water throughput boosts revenues and cash flow growth.

Western Midstream Partners, LP Common Units (WES) Q1 2026 Earnings Call Transcript