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When it comes to energy stocks, for a cheaper stock that provides solid dividends, you may want to check out Antero Midstream Corp. (NYSE: AM).
Formed in 2002 by Paul Rady and Glen Warren, following their success with Pennaco Energy.
According to the website, “Antero Midstream Corporation was formed by Antero Resources Corporation to service its rapidly increasing natural gas and NGL production in the Appalachian Basin. Headquartered in Denver, Colorado, we are focused on creating value through developing midstream infrastructure in two of the premier North American Shale plays, the Marcellus and Utica Shales. Due to its market leading firm transportation portfolio and midstream ownership through Antero Midstream, Antero is the most integrated NGL and natural gas business in the U.S”.
For those not familiar with the Appalachia Basin, the sedimentary basin covers many eastern states including New York, Pennsylvania, Ohio, West Virginia, Alabama and Georgia.
The area is known for its bituminous coal mining but in 1859, oil was discovered in the area, followed by gas. Appalachia produces more than 32% of the U.S. natural gas and 600 thousand barrels of natural gas liquids. And the area is known for its shale oil (high-quality crude oil) that lies between layers of shale rock, impermeable mudstone or siltsone. And the production is thankful to three powerhouse shale locations: Utica Shale, Marcellus Shale and the Upper Devonian Shale.
Back in July 2017, the company’s share price was $22.87 but would go down in price with its lowest being $1.69 during the beginning of the pandemic and now the share has remained under $11, with a 52-week range from $5.09 to $10.68.
Antero Midstream’s market capitalization is $4.4 billion (small cap) and an enterprise value of $7.5 billion. Shares outstanding is 477.5 million with 52% shares held by institutions.
Charles Schwab gives Antero Midstream Corp a Schwab Equity Rating at B (outperform – 21 points), making this stock a “Buy”, while Price Volatility Outlook is “High” (Above Average Price Volatility).
Charles Schwab assigned a neutral for Growth Grade, Quality Grade, Sentiment Grade, with a Positive for Stability Grade and Valuation Grade.
Ned Davis Research assigned the stock a “Neutral” signal due to its NDR Equity Focus Rank of 51.24. While Reuters gives the company a “HOLD” rating.
Antero Midstream currently costs $9.20 (As of August 6th) and the quarterly dividend is $0.22 (with an annual dividend rate of $0.90) and an annual dividend yield of 9.80%. Earnings per share is $.72 and price/earnings at $12.76.
Antero Midstream has increased its dividend each year but Antero Midstream decrease their dividend in 2021 in order to finance the incremental capital investment. According to the company, the reduction “allows us to allocate capital towards the highest rate of return project and AM’s expanded portfolio as a result of the drilling partnership development plan”.
One can look at this decision as positive, as the decrease of dividend can go into the company reducing its debt and in order to see growth, on the other hand, for those who are high yield dividend investors, may become concerned.
But for me, I do invest in Antero Midstream for the dividend but at the same time, for its price per share, I don’t mind the decrease in dividend if it ensures the company can become more healthy and lower its debt.
As always, perform your due diligence and do a lot of research before investing. Talk to a financial advisor and find out if Antero Midstream (NYSE: AM) would be a perfect investment for you.
