Hess Midstream aims for 5% yearly distribution increase by 2027 while adjusting capital plan to reduce expenditures.
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 03 2025
0mins
Source: SeekingAlpha
Operational Performance: Hess Midstream reported strong operational results in Q3 2025, with increased gas throughputs despite challenges from localized flooding. The company executed a $100 million share repurchase and raised distributions by 2.4%, aiming for a 10% annualized increase for Class A shares.
Financial Guidance: The company narrowed its full-year guidance for net income and adjusted EBITDA, expecting net income between $685 million to $695 million and adjusted EBITDA between $1.245 billion to $1.255 billion. Capital expenditures were reduced to approximately $270 million following the suspension of the Capa gas plant project.
Future Outlook: Management anticipates flat fourth-quarter volumes due to lower expected third-party volumes and scheduled maintenance. Guidance for 2026 and 2028 minimum volume commitments will be released after the budget process concludes in December.
Analyst Sentiment: Analysts maintained a neutral tone, focusing on capital allocation and operational trends, while management emphasized financial discipline and the importance of collaboration with Chevron as a sponsor. The sentiment remained steady, with a focus on free cash flow growth and shareholder returns.
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Analyst Views on HESM
Wall Street analysts forecast HESM stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for HESM is 36.50 USD with a low forecast of 34.00 USD and a high forecast of 39.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
3 Analyst Rating
0 Buy
3 Hold
0 Sell
Hold
Current: 36.040
Low
34.00
Averages
36.50
High
39.00
Current: 36.040
Low
34.00
Averages
36.50
High
39.00
About HESM
Hess Midstream LP is a midstream company that owns, operates, develops and acquires a diverse set of midstream assets to provide services to the Company and third-party customers. It owns oil, gas and produces water handling assets that are located in the Bakken and Three Forks Shale plays in the Williston Basin area of North Dakota. Its gathering segment includes Hess North Dakota Pipeline Operations LP and Hess Water Services Holdings LLC, which owns natural gas gathering and compression, crude oil gathering, and produced water gathering and disposal. Its processing and storage segment includes Hess TGP Operations LP and Hess Mentor Storage Holdings LLC, which owns Tioga gas plant, an equity investment in LM4 Joint Venture, and mentor storage terminal. Its terminaling and export segment includes Hess North Dakota Export Logistics Operations LP, which owns Ramberg Terminal Facility, Tioga Rail Terminal, Crude Oil Rail Cars, Johnson's Corner Header System, and other DAPL connections.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Hess Midstream Partners Q4 Earnings Preview and Analysis
- Earnings Announcement Date: Hess Midstream Partners is set to announce its Q4 earnings on February 2 before market open, with consensus EPS estimate at $0.72 and revenue forecasted at $416.44 million, reflecting a 5.2% year-over-year growth.
- Earnings Estimate Changes: Over the past three months, EPS estimates have seen no upward revisions and seven downward adjustments, while revenue estimates experienced one upward revision and three downward revisions, indicating a cautious market sentiment regarding the company's profitability.
- Dividend Appeal: The 8.8% dividend offered by Hess Midstream has drawn investor interest, although analysts caution about potential risks, particularly as the company pivots its capital spending plan to target a 5% annual distribution growth through 2027.
- Financial Performance: Hess Midstream recently reported a GAAP EPS of $0.75, beating estimates by $0.06, and revenue of $420.9 million, exceeding expectations by $2.98 million, demonstrating the company's resilience in the current market environment.
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Energy Midstream Firms Show Significant Dividend Growth
- Delek Logistics Dividend Increase: Delek Logistics Partners declared a quarterly distribution of $1.125 per unit, a 0.4% increase from the previous quarter, extending its distribution growth streak to 52 consecutive quarters with a current yield of 9%, reflecting stable cash flows and financial flexibility.
- Hess Midstream Steady Growth: Hess Midstream's quarterly cash distribution is $0.7641 per share, a 1.2% increase from the prior quarter, with a cumulative dividend growth of 65% since 2021, and an expected annual increase of at least 5% through 2028, ensuring predictable cash flows.
- Plains All American Dividend Boost: Plains All American Pipeline announced a quarterly distribution of $0.4175 per unit, a 10% increase from its prior level, with a compound annual growth rate of 21% over the last four years, currently yielding 8.5%, demonstrating financial flexibility and ongoing investment capacity.
- High Yields Attract Investors: With yields between 8% and 9%, Delek Logistics, Hess Midstream, and Plains All American Pipeline regularly increase their payouts, making them appealing options for investors seeking stable passive income streams.
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