- 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.
For further details see:
Sunoco: Safe But Stuck, How To Describe Their 8%+ Yield In 2022