Market-Thumping USA Compression Stock Pays Reliable 11.7%-Yield Dividends
USA Compression Partners LP Maintains $0.525 Quarterly Payout
The S&P 500 and the Nasdaq are both in bear markets, and chances are high that both will end up posting losses for the year. And with bonds experiencing what some say is their worst year in modern history, it seems there are few places for investors to seek shelter.
Two of the only sectors of the stock market that appear to be bucking the downtrend are energy and consumer staples, and the latter just barely. Energy stocks have been some of the best places to park money in 2022, especially those that pay high-yield dividends.
Investors looking for inflation-tackling dividends from a stock that’s crushing the broader market in terms of share price should consider USA Compression Partners LP (NYSE:USAC). USAC stock is a great energy stock that rewards investors with reliable, ultra-high-yield dividends and long-term stock market gains.
USA Compression Partners LP provides compression services to oil and natural gas companies and independent gatherers, producers, processors, and transporters. The company is the third-largest provider of compression services in the U.S. Together with its subsidiaries, the company provides services under fixed-term contracts in various shale plays throughout the U.S., including Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, and Mississippi Lime. (Source: “Overview,” USA Compression Partners LP, last accessed October 31, 2022.)
USA Compression stock started paying dividends in 2015, and it has never cut its payout. It currently pays quarterly dividends of $0.525 per unit, for a yield of 11.7%.
Q2 Net Income Jumped 237% Year-Over-Year
An improved business environment and increased demand for USA Compression Partners LP’s services have helped the company report excellent second-quarter financial results.
The company’s revenue advanced by 9.5% year-over-year in the quarter to $171.5 million. Its second-quarter net income jumped by 237% year-over-year to $9.1 million. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the second quarter of 2022 were $105.4 million, compared to $100.0 million in the second quarter of 2021. (Source: “USA Compression Partners Reports Second Quarter 2022 Results; Confirms 2022 Outlook,” USA Compression Partners LP, August 2, 2022.)
The company’s 2022 second-quarter operating cash flow was $94.2 million, versus $99.5 million in the second quarter of 2021. Meanwhile, its distributable cash flow inched up by six percent year-over-year to $55.6 million. The company’s distributable cash flow coverage in the second quarter of 2022 was 1.08 times, compared to 1.03 times in the second quarter of 2021.
Eric D. Long, USA Compression Partners LP’s president and CEO, noted, “Continued geopolitical tensions combined with strong global demand for both crude oil and natural gas supported an attractive commodity pricing environment during the quarter…With extremely tight supply/demand balances throughout the world, we see the positive environment for energy continuing throughout the remainder of 2022.” (Source: Ibid.)
To that end, USA Compression Partners LP has maintained its full-year 2022 outlook, expecting to report:
- Net income in the range of $33.0 to $53.0 million, compared to $10.2 million in 2021
- Adjusted EBITDA in the range of $406.0 to $426.0 million, compared to$379.7 million in 2021
- Distributable cash flow in the range of $213.0 to $233.0 million, compared to $209.1 million in 2021
USAC Stock Up 78% in 2022
High global demand for crude oil and natural gas, which has been juiced by geopolitical tensions, has been helping lift USA Compression stock considerably. Trading near record levels, USAC stock is up by:
- 12% over the last month
- 13% over the last three months
- 17% year-to-date
- 20% year-over-year
Chart courtesy of StockCharts.com
The Lowdown on USA Compression Stock
Thanks to high commodity prices and increased demand for USA Compression Partners LP’s products and services, USAC stock has been significantly outpacing the broader market. Moreover, buy-and-hold dividend hogs have been making out like bandits. The company has been able to continue paying reliable, ultra-high-yield dividends.
The situation won’t always be this perfect, but right now, USA Compression stock is in a sweet spot, making it an ideal option for these uncertain times.