SUN - Sunoco: Double-Digit Yield Secured Through Managerial Will

• Earlier in 2020, it looked likely that Sunoco would reduce their distributions given the fallout from the Covid-19 economic downturn and their very high leverage.
• This has not eventuated, largely due to the will of management to place the importance of their distributions above all else.
• Surprisingly their cash flow performance has also been stellar during the last two quarters, which ended up supporting their otherwise risky decision.
• Normally their high leverage would still spell trouble for their distributions, but management has stated that sustaining their distributions is more important than their balance sheet.
• Given their surprising performance and apparent iron will to sustain their very high distribution yield of around 13%, I now believe that a bullish rating is appropriate.

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