- HESM dividends total $3.156 annually, producing a 7.78% forward yield at a $40.59 share price.
- Hess Midstream has raised its dividend for 37 consecutive quarters and targets about 5% annualized distribution growth through 2028.
- Chevron is HESM’s dominant customer and a 37.8% owner, creating a key concentration risk.
High yield with a fresh increase
Hess Midstream’s latest quarterly dividend is $0.789 per share, up from $0.779 previously. Annualized, HESM dividends equal $3.156 per share and provide a forward yield of 7.78% at a $40.59 share price.
The latest increase became ex-dividend on August 6 and represented a modest quarterly gain of roughly 1.3%. Still, HESM has delivered 37 consecutive quarterly dividend increases, a record spanning more than nine years.
Dividend growth averaged 9.0% over one year, 10.0% over three years, and 10.8% over five years. Management’s stated objective is approximately 5% annualized distribution growth through 2028, pairing high current income with moderate compounding.
Fee-based assets support cash-flow visibility
HESM owns gathering pipelines, gas processing, storage, and terminal assets serving North Dakota’s Bakken and Three Forks production regions. The assets generate fees for moving, treating, and storing hydrocarbons rather than relying directly on commodity-price exposure.
This model can make cash flows steadier than those of oil producers. HESM also plans to balance dividend growth with buybacks and debt reduction, supported by about $1 billion of financial flexibility through 2028.
Chevron concentration is the trade-off
Following its Hess acquisition, Chevron holds a 37.8% stake in HESM and is the company’s dominant commercial relationship. Long-term contracts provide support, but they leave HESM heavily reliant on one customer and regional production activity.
Investors should monitor Chevron’s capital-spending plans, Bakken production volumes, contract terms, and any ownership or strategic decisions. Recent commentary flags that Chevron-related developments remain the core HESM issue.
Income investor outlook
HESM dividends may appeal to investors seeking a high current yield with credible, albeit slower, future growth. Its 7.78% yield is below its 8.88% five-year average yield, suggesting the shares are not historically priced for maximum income.
However, debt-to-capital stands at 88%, while the customer base and assets are concentrated around Chevron and one region. HESM suits investors comfortable with midstream-energy exposure and willing to track Chevron’s strategy closely.
