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KNOT Offshore Partners: Still Threading The Needle To Keep That Yield Flowing

Published Wed, 16 Sep 2020 05:10:23 -0400 on Seeking Alpha

Seeking AlphaDividend Ideas | Services  | United KingdomKNOT Offshore Partners: Still Threading The Needle To Keep That Yield FlowingSep. 16, 2020 5:10 AM ET|| About: KNOT Offshore Partners LP (KNOP)by: Daniel ThurechtDaniel Thurecht Long-term horizon, Contrarian, Oil & Gas, industrialsSummarySeveral months ago I highlighted a potential very high yielding investment opportunity for income hungry investors, KNOT Offshore Partners.
This article provides an update since the second quarter of 2020 was very tough and it was originally found that they had little room for error.
Their operating cash flow held up extremely well and barely moved year on year during the first half of 2020, which helped sustain their distributions.
Thankfully, they should be capable of reducing their net debt in the coming years, which will help fix their two main weaknesses, being high leverage and weak liquidity.
Whilst their distributions will remain risky until such time as their leverage is lowered, I nonetheless will be maintaining my bullish rating since a 16% yield more than compensates for this risk.
Introduction
Several months ago I highlighted a potential very high yielding investment opportunity for income hungry investors, KNOT Offshore Partners (KNOP), which still offers a distribution yield of around 16%. Since the original analysis found that they had little room for error, this article provides an update covering their performance during the incredibly tough second quarter of 2020.
Executive Summary & Ratings
Since many readers are likely short on time, the table below provides a very brief executive summary and ratings for the primary criteria that was assessed. This Google Document provides a list of all my equivalent ratings as well as more information regarding my rating system. The following section provides a detailed analysis for those readers who are wishing to dig deeper into their situation.

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