A $33 Double-Digit Yielder

Its distribution has some hurdles to overcome...‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

SPONSORED Former Chicago Board Options Exchange Trader Predicts... Stockflation is coming... Get ready now! Here's how to protect your cash - click here. SAFETY NET Can This Double-Digit Yielder Keep Delivering? Marc Lichtenfeld, Chief Income Strategist, The Oxford Club More than 130 years ago, Sunoco LP (NYSE: SUN) got its start as a small oil company in Pittsburgh, Pennsylvania. Today, it is the largest fuel distributor in the United States. Sunoco distributes more than 8 billion gallons of gasoline each year across 33 states. It also operates 7,300 retail locations. The stock pays a quarterly distribution of $0.8255 per unit, or 10% annually. As a partnership, the company pays a distribution - not a dividend - and the ownership stakes are called units, not shares. That double-digit yield likely makes income investors salivate, especially considering the company is not some unknown or speculative name. It's been around for more than a century, after all. It has also paid a distribution every year since 2012. Sunoco consistently raised the distribution every quarter until it hit $0.8255 per unit in November 2016, where it has remained since. It has never cut the distribution. Can it continue to afford the strong yield it is paying investors? SPONSORED NO more coin tosses. NO more guessing games. Just a special trade that can make you BIG money - whether a stock goes up OR down ATTENTION: If you're fed up with the coin-flip approach to trading stocks... and want a better, easier way... Then it's time you discover the single greatest trade in the history of the markets. This proven technique can help you rack up gains as big as 136%... 178%... and 188% OVERNIGHT - regardless of whether a stock goes up or down. For details on the Win-Both-Ways Trade, click here NOW! For partnerships, we look at cash available for distribution (CAD) as a measure of cash flow. Last year saw a big bump in CAD for Sunoco to $517 million from $453 million. This year, however, that number is forecast to drop to $443 million - the company's lowest CAD in years. The biggest sin a company can commit in SafetyNet Pro's eyes is having declining cash flow. What Is SafetyNet Pro? SafetyNet Pro is a groundbreaking tool that predicts dividend cuts with stunning accuracy. With it, you can determine the dividend safety rating of nearly 1,000 stocks. Access to SafetyNet Pro is reserved exclusively for subscribers of Marc's newsletter, The Oxford Income Letter. To learn more about SafetyNet Pro and The Oxford Income Letter, click here now.   So the fact that this year's number is expected to go lower means the dividend safety rating will certainly be penalized despite Sunoco's solid track record of paying the distribution without cuts over the past nine-plus years. Debt is also too high. Its debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) is 5.8. However, with the company intent on paying down debt, that number is forecast to be lower in 2021. When a company's debt is too high, it means more of its cash is being used to pay down interest, which lowers cash flow. So the lower the debt, the better when it comes to distributions. Some good news is that despite the lower-than-expected cash flow, Sunoco can still afford its distribution. Last year, the payout ratio based on CAD was 68%. This year, that number is expected to rise to 79%, which is still fine. As long as a partnership is not paying more than 100% of its cash flow to investors, it's not a problem. I don't expect a cut to Sunoco's distribution in the immediate future. But that declining CAD is something to keep an eye on. If it does come in significantly lower than last year's and if later in the year it's determined that cash flow will fall again in 2022, the company may have to consider reducing the distribution. For now, the risk of a distribution cut is moderate. Dividend Safety Rating: C If you have a stock whose dividend safety you'd like me to analyze, leave the ticker symbol in the comments section. Good investing, Marc Leave a Comment TYPE A COMPANY'S NAME BELOW   MORE FROM WEALTHY RETIREMENT Beat the Market by Investing in Spinoff Companies Will President Biden Sink the Stock Market? 3 Companies With Generous Monthly Dividends Facebook Twitter Email Share Push Alert SPONSORED You are receiving this email because you subscribed to Wealthy Retirement. Wealthy Retirement is published by The Oxford Club. Questions? Check out our FAQs. Trying to reach us? Contact us here. Please do not reply to this email as it goes to an unmonitored inbox. 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