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With a more than 8% yield, Western Midstream Partners (WES +1.39%) should be hard to ignore. However, it doesn't have as much positive coverage on Wall Street as other master limited partnerships (MLPs). As a result, it's flying under the radar of most investors.Here's a look at why you won't want to ignore this high-yielding MLP.
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Underfollowed and unloved Fourteen Wall Street analysts currently cover Western Midstream Partners. Only four have a "buy" rating on the MLP, while nine rate it a "hold" and one has a "sell" rating. For comparison, 21 analysts currently cover both Energy Transfer (ET 0.20%) and Enterprise Products Partners (EPD +1.52%). They're very bullish on Energy Transfer (five "strong buys" and 14 "buy" ratings) and moderately bullish on Enterprise Products Partners (two "strong buys" and eight "buys").
There are many reasons fewer analysts cover this MLP. It's not as big or as diversified as Energy Transfer or Enterprise Products Partners. Western Midstream also has significant ties to one company: Occidental Petroleum. The oil giant is its top unitholder (39.5% of its common units) and largest customer (55% of its revenue in 2025, falling to 47% in 2026). These and other factors are leading some Wall Street analysts to completely ignore the company.
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What Wall Street is missing For the most part, Wall Street analysts focus on growth over income. As a result, they tend to miss out on the total return potential of some higher-yielding stocks.
Western Midstream's base return comes from its high-yielding distribution. At over 8%, the MLP offers a higher cash yield than Enterprise Products Partners (5.8% current yield) and Energy Transfer (6.6%). That high-yielding payout is on a rock-solid foundation. It generates stable cash flows backed by long-term, fee-based contracts with Occidental Petroleum and third-party customers. The MLP currently expects to produce between $1.9 billion and $2.1 billion of distributable cash flow this year, easily covering its $1.5 billion annual distribution outlay. It also has a solid investment-grade balance sheet backed by a low 3.1 times leverage ratio.
That gives the MLP the financial flexibility to grow its operations through bolt-on acquisitions and organic growth capital projects. The company recently closed its $1.6 billion acquisition of Brazos Delaware, which strategically expands its operations in a core area, further diversifies its revenue away from Occidental, while immediately boosting its cash flow per unit. The MLP also has several organic expansion projects underway, including the Loving II gas processing plant and Pathfinder Pipeline, both of which will enter commercial service early next year. Western expects its growth drivers to fuel long-term adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth of 4% to 5% per year. That should support continued annual distribution growth in the low-to-mid single-digits.
High-octane total return potential Western Midstream's high-yielding distribution provides an over 8% base cash return each year, which should grow at a low-to-mid single-digit rate. The company's earnings and distribution growth should support a steadily rising unit price. Add it up, and the MLP could deliver an annual total return of 12% to 14%. That's an attractive proposition for investors comfortable with receiving the Schedule K-1 Federal tax form the MLP sends each year.
Matt DiLallo has positions in Energy Transfer and Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners and Occidental Petroleum. The Motley Fool has a disclosure policy.