Westlake Chemical Partners Offers 8.7% Yield at 12.3x Forward Earnings
Westlake Chemical Partners LP trades at 12.3x forward earnings versus a 15.5x sector average, while units have gained 16% year-to-date despite a 7.5% 52-week decline. It offers a forward annual distribution of $1.89 per unit for an 8.7% yield, though coverage sits at 136%.
1. Asset Structure and Agreements
Westlake Chemical Partners LP is a master limited partnership owning ethylene production assets that it sells under a long-term take-or-pay agreement to Westlake Corporation, providing stable revenue linked to production volumes.
2. Stock Performance
WLKP units have declined 7.5% over the past 52 weeks but rebounded with a 16% gain year-to-date, reflecting renewed investor interest in high-yield materials names amid energy price swings.
3. Valuation and Yield
WLKP trades at 12.26x forward earnings compared to a 15.51x sector average, and it offers a forward annual distribution of $1.89 per unit for an 8.69% yield, making it one of the highest-yielding materials stocks.
4. Dividend Coverage and Risks
The most recent distribution of $0.4714 declared in February and a forward payout ratio of 136% highlight tight coverage, indicating that any cash flow disruption could pressure future distributions.