Do you think the dividends from SunCoke are going to stop? Not a chance. They are making money, and as an LP they have to pay out those profits. In fire years? There will still be 7 to 10 years left on their take or pay contracts.
I've never seen anything like this. 21% dividend? Normally that's the last dividend before they stop them altogether. But there just isn't any sign of that. SunCoke LP is one of the most misunderstood stocks out there. People think they are a coal miner and are going the way of Arch. But SunCoke LP doesn't own any coal, they just process it. With their 'take or pay' contracts they have guaranteed revenue for the next 12 years or so.
The risk? The risk would be bankruptcies in the steel industry. Then they could break the contracts and SunCoke LP would be in trouble. But so far that isn't happening. Though the steel industry isn't great, they are not on the edge of bankruptcy, and earnings are expected to rise for steelmakers next year. With some new tariff protections probably kicking in in the next few months, steelmakers should have an ok 2016. And an ok 2016 is more of our 21% dividend. Just crazy.
I get that the earnings news for today is not great and probably a 10% haircut was in order. But 30%? That just seems so excessive. The store closings will be done slowly and only represent 4% of revenue. Management seems pretty positive about things going forward. It just seems so overdone to me.