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10.6% Yield, Strong Growth, Recession Resistance From Fuel Distributor Sunoco

Published Wed, 26 Jun 2019 08:30:00 -0400 on Seeking Alpha

Recently, we covered Global Partners LP (GLP) that yields 9.8% and how it has transitioned to a fuel distribution business model. We wanted to highlight another recession resistant fuel distribution company.
Company Overview
Sunoco LP (SUN) is a growth oriented company in the downstream energy sector. It is one of the largest wholesale fuel distribution and retail marketing platforms in the U.S. The company is based in Dallas, Texas, and operates across 30 states throughout the southeast, mid-Atlantic and northeast regions of the United States. It is structured as a master limited partnership (MLP), and usually pays each year the vast majority of its profits back to shareholders in the form of distribution.

Source: Company's website
SUN is almost entirely a pure play on the fuel distribution market. Currently SUN is owned under the umbrella of companies owned by Energy Transfer (ET). SUN joined this family via the merger of Energy Transfer Partners (ETP) and Sunoco Logistics Partners (SXL). SUN later saw its ownership shift again with the Energy Transfer Equity and ETP merger.

Source: SUN 10-K
ET itself yields 8.52% and currently is a core holding of ours. SUN's success transfers positively to ET via distributions and IDR payments.
SUN reports as two operating segments:
Source: SUN Earning Slides
SUN has aligned itself to be totally focused on fuel distribution - which provides it with contracted reliable revenue. The "All other"... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
GLOBAL PARTNERS 19.17   12.4 1.54 2.06 10.73
 

GLOBAL PARTNERS - GLP
GLOBAL PARTNERS - GLP  


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