CPLP - Capital Product Partners: A 10%+ Yield Could Be Coming But It's Already Risky

• After seeing a very large distribution reduction in early 2020, Capital Product Partners appeared to be pivoting towards unit buybacks in early 2021.
• Management has now clearly signaled a pivot back towards distributions that stands to see a potential very high yield of 10%.
• This would only cost around one quarter of their operating cash flow and thus is easily affordable even before the boost they should see from their six newly acquired LNG vessels.
• Sadly these will push their leverage well into the very high territory even after counting their estimated additional earnings.
• Disappointingly, this places their potential higher distributions on shaky ground even before they are announced and thus, I believe that only a neutral rating is appropriate.

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