Rattler Midstream (NASDAQ:RTLR) has gotten off to a bit of a rocky start as a public company. Shares of the energy company are down about 20% since the initial public offering (IPO) earlier this year. That slump comes even though Rattler has delivered excellent performance so far. Not only have its earnings soared, but it has also initiated a dividend -- which currently yields 8.8% -- and secured a couple of needle-moving growth opportunities.

Those new investments, when combined with the embedded growth of its legacy midstream operations, have Rattler on track to generate high-octane earnings growth in 2020. Add that upside to its lower price, and it could generate big-time total returns in the coming year.

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Gathering a lot of growth

Rattler Midstream's volumes have surged over the past year, in large part because of the growth of its parent, Permian Basin-focused oil and gas producer Diamondback Energy (NASDAQ:FANG). As Diamondback's production grows, those volumes flow through Rattler's gathering systems, enabling it to collect a rising stream of fees. With Diamondback Energy on track to continue growing its production at a double-digit pace next year, Rattler's gathering earnings will rise sharply.

The company further bolstered its gathering business in October when it formed a joint venture to acquire the Reliance Gathering system for $355 million. That deal diversified Rattler's customer base since Diamondback supplies only 35% of that system's volumes. Meanwhile, it will provide a near-term earnings boost along with steady growth as producers on the system increase their output in the coming years.

In addition, Rattler owns stakes in two long-haul oil pipeline developments. Both projects, Gray Oak and EPIC, are in the process of starting up. Because of that, they'll provide a notable boost to earnings next year.

In the company's view, its adjusted EBITDA will rise from a projected range of $255 million-$265 million this year to between $350 million and $400 million in 2020. At the midpoint, that's a 44% increase.

A gusher of excess cash awaits

The surge in earnings sets Rattler up to hit a key inflection point next year. That's because it comes even as the company's investment spending is on track to decline. Rattler expects to invest another $200 million to $225 million on the continued build-out of its gathering systems, which is less than the roughly $250 million it will spend this year. The company also plans to spend another $100 million on long haul pipeline investments, down from a range of $260 million-$270 million this year. Driving that decline is the start-up of EPIC and Gray Oak. In place of those investments, the company's long-haul pipeline-related spending will come from its stake in the Wink to Webster pipeline joint venture, which it joined earlier this year. That system should start up in the first half of 2021, positioning the company to continue growing its earnings at a fast pace next year.

Because capital spending is declining even as earnings are rising, Rattler Midstream is on track to generate significantly more free cash flow next year. The company's operated midstream assets alone will generate $145 million in free cash. That's up from $6 million this year. Meanwhile, even after factoring in its $100 million investment in Wink to Webster, it will generate $45 million in free cash, a major improvement from the $259 million it's on track to consume this year.

That excess cash will give Rattler all the money it needs to finance its high-yielding dividend. That's because, at the current annualized rate of $1 per share, it will only pay out about $45 million next year. Meanwhile, with only $100 million of debt on its balance sheet, it has an ultra-low leverage ratio of 0.4 times debt-to-EBITDA, well below the 4.0 comfort level of most midstream companies. As a result, it has plenty of financial flexibility to continue to make additional growth-focused investments if another compelling opportunity arises.

A high-octane, high-yielding stock

Rattler Midstream's investments in building out gathering and long-haul pipeline businesses in the Permian Basin is about to pay off in 2020. Those investments have it on track to grow earnings by 44%, which should produce a gusher of free cash flow. Add that high-octane growth to its high-yielding dividend and Rattler could generate a massive total return in 2020, especially given how much cheaper it has become after selling off 20% so far this year.