MLPs/Midstream 1Q25 Dividend Growth Unfazed by Volatility

• On a year-over-year basis, 96.0% of the Alerian Midstream Energy Index (AMNA) by weighting have grown their dividends. No AMNA constituent has cut its regular dividend since July 2021.
• Dividend growth and a pullback in equity prices has increased MLP/Midstream yields, which could represent an opportunity for income investors.
• Midstream companies are expected to continue executing on dividend growth given fee-based businesses backed by long-term contracts that support stable cash flows.

Even amid market volatility and oil price weakness, midstream MLPs and corporations continued to grow their dividends for the first quarter of 2025. Fee-based businesses backed by long-term contracts support stable cash flows, and throughout earnings season, companies reaffirmed 2025 financial guidance provided previously. Recent weakness in energy equities broadly has led to higher MLP/midstream yields, even as dividend growth is expected to continue. This note reviews 1Q25 dividend increases and examines current yields relative to recent history.

A number of midstream MLPs and corporations raised their dividends for 1Q25. For companies that raise their payouts once a year, increases are often made with 1Q or 4Q dividends. Meanwhile, some companies, mostly MLPs, continue to raise their payouts each quarter. Execution on dividend growth remains a key tailwind for the midstream space. Importantly, there has not been a cut to a regular dividend for a constituent of the broad Alerian Midstream Energy Index since July 2021.

Most notably for 1Q25, Targa Resources (TRGP) increased its dividend by 33% to $1.00 per share in line with plans provided in November 2024. TRGP’s dividend is now above where it was when the company cut its payout back in 2020.

Other large percentage increases for 1Q25 dividends were announced in February alongside 4Q24 results. Notably, DT Midstream (DTM) increased its 1Q25 dividend by 11.6%, and Gibson Energy (GEI CN) announced a 4.9% increase to its dividend. Aris Water Solutions (ARIS) raised its 1Q25 dividend by 33% to $0.14 per share alongside its 4Q24 results.

TC Energy (TRP CN) and Kinder Morgan (KMI) typically raise their payout once a year with the 1Q25 dividend, increasing by 3.3% and 1.7%, respectively. Following a similar trend, Pembina (PPL CN) also increased its 1Q25 dividend by 2.9%. TC Energy has now delivered annual dividend growth for 25 straight years. As a reminder, TRP adjusted its dividend in proportion to the spinoff of South Bow (SOBO CN) in October 2024.

Among MLPs, Western Midstream (WES) raised its distribution by 4.0%. Energy Transfer (ET), Sunoco (SUN), Hess Midstream (HESM), Global Partners (GLP), and Delek Logistics (DKL) all raised their distributions sequentially.

The pie charts below show quarter-over-quarter changes to dividends for AMNA, the Alerian MLP Index, and the Alerian MLP Infrastructure Index by comparing 1Q25 payouts to those made for 4Q24. To be clear, 1Q25 dividends refer to dividends paid in 2Q25 based on operational performance in 1Q25.

Because several companies only raise their payouts once per year, a year-over-year comparison can provide a clearer picture of dividend trends. The chart below shows a clear bias towards rising payouts. More than 80% of AMZ and AMZ by weighting as of May 8 have increased their dividends within the last year and for AMNA it is 96.0%. Looking at absolute numbers, the majority of constituents in each index have grown their dividends.

Combining widespread dividend increases with the pullback in equity prices, midstream/MLP yields have risen recently. Notably, the yields for AMZ and AMZI as of May 8 were 50 basis points higher than at year-end 2024 and comfortably above the three-year average. While less drastic, the yield for AMNA has also increased since the end of 2024 but remains below the average from the last few years.

When yields rise, investors may have concerns about the durability of payouts. For investors using this space for income, positive dividend trends can provide reassurance and add to confidence in the income provided by midstream/MLPs. In volatile markets, healthy yields also add to midstream’s defensiveness and support total returns.

Looking ahead, companies are expected to continue providing dividend growth. Earnings season saw companies reaffirm financial guidance for 2025, with most companies expecting mid-single-digit EBITDA growth this year (read more). As discussed last week, dividend coverage remains comfortable (read more), and cash flows are expected to rise as companies pursue growth projects, particularly around natural gas liquids and natural gas (read more).

On its recent earnings call, Cheniere (LNG) reiterated plans to increase its dividend by approximately 10% through the end of the decade. MPLX (MPLX) also noted that the growth of the business is expected to support annual distribution increases on par with the 12.5% increase from last year. LNG and MPLX typically raise their November payouts.

Amid oil price weakness and market volatility, midstream companies continue to deliver dividend growth. Positive dividend trends can help investors feel confident in MLP/midstream yields, which have risen lately. For income investors, attractive yields backed by growing dividends can make midstream a compelling opportunity in a volatile market.

Register today for our 30-minute webcast, “The State of Midstream/MLPs in Volatile Markets,” on May 20, 2025 at 12:30 p.m. ET.

AMZI is the underlying index for the Alerian MLP ETF (AMLP) and the ETRACS Alerian MLP Infrastructure Index ETN Series B (MLPB). AMZ is the underlying index for the JPMCFC Alerian MLP Index ETN (AMJB), the ETRACS Alerian MLP Index ETN Series B (AMUB), and the ETRACS Quarterly Pay 1.5x Leveraged Alerian MLP Index ETN (MLPR).

Related Research:

Examining 2024 Midstream/MLP Dividend Coverage

Delving into MLP/Midstream Total Shareholder Yield

4Q24 Midstream/MLP Dividend Recap: Growth Continues

Midstream’s Natural Gas Outlook Continues to Strengthen

Examining Midstream EBITDA Guidance for 2025 and Beyond

vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for AMJB, AMUB, MLPR, AMLP, and MLPB, for which it receives an index licensing fee. However, AMJB, AMUB, MLPR, AMLP, and MLPB are not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing or trading of AMJB, AMUB, MLPR, AMLP, and MLPB.

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