SUN - Sunoco: Safe But Stuck How To Describe Their 8%+ Yield In 2022

• Despite Sunoco sustaining their high 8%+ distribution yield throughout the turmoil of 2020, it nevertheless is still not one that investors can set and forget.
• Throughout 2021 their cash flow performance has been broadly flat despite their strong surface-level results aided by a working capital draw.
• This once again still leaves their distribution coverage only adequate and thus incapable of funding higher distributions for the foreseeable future.
• Despite benefitting from inventory valuation adjustments, their leverage remains high and whilst not dangerous, they cannot safely utilize unit buybacks to boost their future distributions.
• This leaves their distributions safe but stuck heading into 2022 and beyond, thereby meaning that I believe maintaining my neutral rating is appropriate.

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