Last year was a brutal one for the oil industry. The COVID-19 outbreak torpedoed oil demand, forcing producers to reduce their output. That impacted the flow of oil going through pipeline systems, weighing on the cash flow of MLP Plains All American Pipeline (NYSE: PAA), as evidenced by its recent fourth-quarter earnings report. That put pressure on its unit price — which has plunged more than 45% over the past year — and pushed its dividend yield up to 7.8%.
However, the oil pipeline company believes its valuation has fallen too far given the cash flow generating capability of its midstream operations. It’s accelerating its strategy to bolster its value.