HESM

Brian, a caller from Pennsylvania, phoned in to Mad Money on August 13, 2026 with a stock his son had been researching.

Income investors have plenty of high-yield options, but very few pass the coverage test.

Hess Midstream Partners NYSE: HESM reported higher second-quarter net income and adjusted EBITDA, supported by lower operating expenses and general and administrative savings, while reaffirming its full-year financial outlook and plans for shareholder returns and debt reduction.

Hess Midstream LP (HESM) Q2 2026 Earnings Call Transcript

The midstream energy sector continues to demonstrate its commitment to returning capital to shareholders. Major energy infrastructure companies recently announced sequential increases in payouts during Q3 2026, bolstering income generation across the space.

HOUSTON--(BUSINESS WIRE)--Hess Midstream LP Announces Distribution Per Share Level Increase.

Hess Midstream LP is transitioning from heavy infrastructure investment to maximizing cash generation and increasing shareholder returns, forming the basis for my Buy rating. HESM's fee-based business model, supported by long-term agreements and minimum volume commitments, underpins dependable cash flows and sustainable distribution growth. Management targets at least 5% annual distribution growth through 2028, alongside disciplined unit repurchases, prudent debt management, and selective acquisitions.

Hess Midstream remains a "Strong Buy," offering an 8.5% yield and at least 15% upside, despite recent underperformance and Bakken drilling headwinds. HESM's long-term contract with Chevron through 2033, with annual CPI-linked fee escalators, secures stable cash flow and mitigates near-term oil price and volume risks. Free cash flow yield stands at ~13%, supported by reduced capex, growing third-party revenues, and robust EBITDA margins of 83%.

The Undercovered Dozen series spotlights 12 lesser-covered stocks featured on Seeking Alpha between May 29 and June 5. This curated selection aims to provide fresh investment ideas and foster community discussion around under-the-radar equities. Readers are encouraged to engage, share perspectives, and highlight additional overlooked investment opportunities.

Key Takeaways: On a year-over-year basis, 96.0% of the Alerian Midstream Energy Index (AMNA) by weighting have grown their dividends. MLPs largely drove sequential growth in payouts for 1Q26, while most corporations kept their dividends steady.