Midstream investing continues to be an excellent route for investors seeking total return.
Cheniere Energy recently announced an increase to its share repurchase authorization of $4 billion through 2027. Additionally, Cheniere plans to increase its 3Q24 dividend by roughly 15%.
“This announcement solidifies our line of sight towards the goals of the capital allocation plan to maximize shareholder value by deploying over $20 billion of available cash towards accretive growth, capital returns, and a sustainable investment grade balance sheet, to generate over $20 per share in run-rate distributable cash flow for shareholders,” stated Zach Davis, Cheniere Executive Vice President and Chief Financial Officer.
Buybacks Complement Dividends
Cheniere has led the midstream space in buyback activity in recent quarters, spending $1.2 billion on repurchases in 1Q24 alone. While midstream has long been known for its income, companies have increasingly utilized buyback authorizations to return excess cash to investors.
See More: Examining MLP/Midstream Dividend and Buyback Yields
The Alerian Energy Infrastructure ETF (ENFR ) can give investors access to the benefits of midstream’s growing dividends and buybacks. Among other dividend-producing energy infrastructure players, Cheniere Energy is within the top ten largest holdings for the fund.
See More: 1Q24 Midstream/MLP Dividends: Growth Story Intact
ENFR tracks the Alerian Midstream Energy Select Index (AMEI) and seeks to provide both income and capital appreciation. The fund’s trailing twelve-month yield is sitting at 5.12%, as of June 21st, 2024.
AMEI is a capped, float-adjusted, and cap-weighted index that invests in U.S. and Canadian companies participating in midstream operations. Over 75% of AMEI by weighting has a buyback authorization in place.
Mounting Investor Momentum
Fund flows illuminate how investors are making the mid-year pivot to ENFR. As of June 21st, 2024, the fund has seen over $6 million of inflows during the last month alone.
See More: Midstream/MLP Buybacks Rebounded in 1Q24
These flows are occurring as ENFR’s midstream holdings continue to generate returns. The fund has a year-to-date return of 15.45% as of June 21st, 2024.
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for ENFR, for which it receives an index licensing fee. However, ENFR is 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 ENFR.
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