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Steady Streams: The Energy Stock Fueling 4.87% Yields

Author

Noah Zelvis
August 11, 2025

Antero Midstream Corporation (NYSE: AM) is an energy-sector stock that runs under the radar but thrives on its anonymity.

This midstream energy company is profiting from increased energy demand and soaring global energy prices.

Its critical infrastructure makes it a necessary lynchpin in the worldwide transportation of natural gas and NGLs.

The Denver-based firm pays a 4.87% yield – above average for the sector.

With net income per share growing 44% in Q2 alone and the stock price still under $20, it’s one of the best setups you’ll find in this sector right now.

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Operational Overview and Recent Earnings

Antero Midstream has supported natural gas and natural liquids production in the Appalachian Basin since 2012.

To facilitate that production, it owns and operates an integrated system of gathering pipelines, compressor stations, and processing and fractionation plants in West Virginia and Ohio.

It also operates two independent water handling systems and primarily serves Antero Resources (NYSE: AR), the second-largest NGL producer in the U.S. 

AM’s pipeline and processing infrastructure transports and processes approximately 3 Bcfe per day of liquids-rich natural gas and NGLs. 

It plays a vital role in transporting and processing natural gas and liquid petroleum gas (LPG) for international markets, with 23.6 million barrels of Antero Resources' LPG volume shipped overseas in 2024. 

Q2 output set a new company record, with 3.5 Bcf/d of production gathered. This represented a 6% increase year-over-year.

As per the CFO, AM’s record gathering and processing volumes in the second quarter led to an 11% year-over-year increase in EBITDA, while capital expenditure declined by 13%.

This capital efficiency drove an 89% increase in Free Cash Flow compared to the second quarter of 2024.

Management has used the increase in Free Cash Flow to reduce debt by approximately $170 million over the past year, including almost $100 million year-to-date. 

The company sees significant future demand from Gulf Coast LNG facilities as well as natural gas-fired power demand from data center growth in Appalachia, and has raised its full-year outlook accordingly.

Action: Antero Midstream's stock price is trading close to the highest analyst price target of $19.00.

Consider gradually building your position to average the purchase price and mitigate timing risks.

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Dividend Profile

AM pays a dividend of 22 cents, with a yield of 4.87%.

The company distributes around 80% of its earnings to shareholders, reflecting a strong dedication to paying dividends.

Although this payout highlights commitment to income, it could constrain the firm’s capacity to allocate funds toward expansion and growth initiatives. 

Nevertheless, healthy free cash flow and a prudent level of debt offer a financial cushion that supports the ongoing reliability of its dividend payouts.

That said, dividend growth has remained flat following a ~ 25% reduction in payout in 2021.

Action: The steady dividend level since 2021 reflects a conservative approach, likely to maintain payout sustainability given either market or operational challenges. 

If you're seeking a steady income with a moderate yield, Antero Midstream’s current quarterly dividend may be attractive.

However, the lack of dividend growth since 2021 suggests income won’t increase anytime soon.

Watch company fundamentals such as Free Cash Flow (FCF), Debt Levels, and market conditions to gauge dividend sustainability.

Consider utilizing a dollar-cost averaging strategy to build your position over time, reducing risk from price volatility or unexpected dividend changes.

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Bear Case

As a midstream energy company, Antero’s cash flow and earnings are sensitive to fluctuations in natural gas and oil markets.

Prolonged low commodity prices could squeeze cash flow and threaten dividends. 

Although leverage is currently moderate, any deterioration in earnings could force the company to prioritize debt repayment or capex over dividends.

Furthermore, energy infrastructure firms face increasing regulatory scrutiny and environmental concerns, which could add costs or restrict operations, impacting profitability and dividends.

Final Thoughts

Antero Midstream presents an attractive opportunity for dividend investors seeking a solid yield in the energy infrastructure sector.

Its strong free cash flow generation and conservative leverage provide a reliable foundation to support ongoing dividend payments. 

The company’s demonstrated commitment to shareholder returns, evidenced by steady dividends since the 2021 adjustment and active share buybacks, signals confidence in its long-term cash flow stability. 

For investors willing to look beyond short-term volatility, Antero Midstream offers the potential for consistent income with the possibility of dividend growth as market conditions improve and cash flow strengthens.

Gradual accumulation at current levels could position dividend-focused portfolios to benefit from this resilient energy infrastructure player over time.

That’s all for today’s edition of the Dividend Brief.

Thanks for reading, and if you have any feedback or dividend stocks you want me to take a look at, just reply to this email!

—Noah Zelvis
DividendBrief.com