HOUSTON, August 22, 2026, 08:10 CDT —
- Hess Midstream ended trading on Friday at $39.14, resulting in an annualized yield of 8.06% from its most recent payout.
- Planned distributions are covered approximately 1.43 times by midpoint 2026 adjusted free cash flow.
- Revenue and major oil volumes declined, but reduced capital expenditures improved cash conversion.
- The average price target from seven analysts stands at $37.50, which is under Friday’s closing price.
Hess Midstream LP NYSE:HESM closed at $39.14 on Friday. The stock rose 0.1% during the session, though it declined 1.6% over the week. U.S. markets are closed for the weekend.
The most recent quarterly payout of $0.7888 per share brings the annualized total to $3.1552. This represents a forward yield of 8.06% based on Friday’s close. The distribution, which was paid on August 14, increased by 1.2% from the previous quarter.
The yield is higher than those of two major midstream partnerships. Western Midstream Partners LP (NYSE:WES) provides a yield near 7.69%, and MPLX LP NYSE:MPLX delivers 7.37%. HESM’s senior yield is accompanied by less robust recent performance.
| Midstream stock | Aug. 21 close | Annualized payout | Forward yield | Weekly move | 2026 move |
|---|---|---|---|---|---|
| Hess Midstream (HESM) | $39.14 | $3.1552 | 8.06% | -1.61% | +13.19% |
| Western Midstream (WES) | $48.36 | $3.72 | 7.69% | -0.60% | +21.84% |
| MPLX (MPLX) | $58.41 | $4.306 | 7.37% | -1.00% | +9.71% |
Wall Street is showing a cautious stance. The average price target among seven analysts surveyed by S&P Global is $37.50, which is 4.2% under Friday’s closing price, excluding distributions. Five analysts call HESM a Hold, while two assign it the lowest available rating.
| Analyst | Firm | Recommendation | Target | Date |
|---|---|---|---|---|
| Robert Kad | Morgan Stanley | Sell | $39 | Aug. 12, 2026 |
| John Mackay | Goldman Sachs | Sell | $32 | Aug. 4, 2026 |
| Jeremy Tonet | J.P. Morgan | Hold | $39 | July 16, 2026 |
| Not listed | UBS | Hold | $37 | July 9, 2026 |
| Praneeth Satish | Wells Fargo | Hold | $40 | May 5, 2026 |
The division can be traced to the cash-flow situation. Revenue for the second quarter declined by 3.7% compared with the prior year. Despite this, adjusted free cash flow rose 19.5% to $231.6 million as capital expenditures decreased by 56%.
| $ millions, except per-share data | Q2 2026 | Q1 2026 | Q2 2025 | Year-over-year |
|---|---|---|---|---|
| Revenue | 399.0 | 390.1 | 414.2 | -3.7% |
| Adjusted EBITDA | 313.7 | 299.8 | 316.0 | -0.7% |
| Adjusted free cash flow | 231.6 | 237.0 | 193.8 | +19.5% |
| Capital spending | 30.6 | 10.4 | 70.0 | -56.3% |
| Distribution per share | $0.7888 | $0.7792 | $0.7370 | +7.0% |
From an investor perspective, the increase in cash was not driven by higher throughput. The primary factors were the completion of the compression buildout and reduced capital requirements. Gross adjusted EBITDA margin improved to 85%, up from 82%.
The present 2026 management plan highlights that advantage. Adjusted free cash flow at the midpoint stands at $935 million. With planned distributions set at $655 million, roughly $280 million remains after payments.
| 2026 guidance, $ millions | Initial plan | Current plan | Change |
|---|---|---|---|
| Adjusted EBITDA midpoint | 1,250 | 1,250 | No change |
| Capital spending | 150 | 105 | -45 |
| Adjusted free cash flow midpoint | 875 | 935 | +60 |
| Targeted distributions | Not specified | 655 | — |
| FCF after distributions | Not specified | 280 | — |
| Implied coverage | Not specified | 1.43x | — |
The volumes reflect the reason investors seek higher yields. Oil gathering decreased 19% from a year earlier. Crude terminaling was down 15%, and water gathering slipped 12%. Gas processing was 4% lower following scheduled maintenance at the Tioga Gas Plant.
| Q2 throughput, thousands per day | 2026 | 2025 | Change | 2026 full-year guide |
|---|---|---|---|---|
| Gas gathering, Mcf | 445 | 464 | -4.1% | 450–460 |
| Oil gathering, barrels | 103 | 127 | -18.9% | 115–125 |
| Gas processing, Mcf | 433 | 449 | -3.6% | 435–445 |
| Crude terminaling, barrels | 117 | 137 | -14.6% | 125–135 |
| Water gathering, barrels | 121 | 138 | -12.3% | 125–135 |
Chief Executive Jonathan Stein stated, “In the second quarter of 2026, we continued to progress our operational priorities, executing a safe and efficient maintenance program.” He connected free cash flow with both shareholder returns and the company’s balance-sheet strength. Company results
Contracts help mitigate volume risk. Hess Midstream reports all its contracts use fee-based structures, and nearly 95% of projected 2026 revenue is secured with minimum-volume commitments. Key deals with Chevron Corporation NYSE:CVX are in place through 2033.
However, reliance on its sponsor remains a constraint for the rerating. Chevron scaled back its Bakken drilling to three rigs, with HESM projecting largely unchanged oil volumes until 2028. In June, Morgan Stanley downgraded HESM to Underweight, pointing to restricted long-term growth prospects and the sponsor’s strategic approach.
There are no HESM earnings or distribution announcements slated for next week. Instead, investors are expected to focus on oil market trends, developments in the Bakken region, and if shares move back above $40. The 200-day moving average stood near $37.32 as of Friday.
Risks: Reduced Chevron drilling may bring volumes nearer to minimum contract levels. Increased rates might make the 8% yield less attractive. Conversely, more rapid gas growth, higher tariffs or further buybacks could have a positive impact.
Currently, the payout appears secure. Valuation, however, remains a tougher issue. The cash yield for investors stands at 8%, yet the majority of analysts expect limited price appreciation.
Related articles: Dividends
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