On Jan 29, 2014, energy pipelines and terminals operator, Sunoco Logistics Partners LP (SXL), declared that its general partner, Sunoco Partners LLC, raised its fourth-quarter 2013 cash distribution to 66.25 cents per unit ($2.65 per unit annualized). This reflects a hike of approximately 5.0% sequentially and 22.0% year over year.
Notably, the latest payout increase of Sunoco Logistics marks the 35th distribution hike. Moreover, for each of the last five quarters, the partnership has raised its quarterly distribution by 5.0%. Sunoco Logistics’ new distribution is payable on Feb 14, 2014 to unitholders of record as of Feb 10, 2014.
The partnership will likely report its fourth-quarter 2013 results on Feb 19, 2014, after the closing bell. The Zacks Consensus Estimate for Sunoco Logistics’ fourth-quarter stands at 71 cents per unit.
Philadelphia-based Sunoco Logistics, a master limited partnership (MLP), acquires, owns, and operates a geographically diverse portfolio of refined product and crude oil pipelines and terminal facilities. Its facilities are located in 17 states in the Northeast, the Midwest, the Southeast and the Southwest of the country.
However, weak refined products demand and refinery downtime – which adversely affects pipeline and terminal throughput – may present a risk to the cash flow estimates and lower Sunoco Logistics’ distribution growth rate. Moreover, unfavorable regulatory changes by the Federal Energy Regulatory Commission (:FERC) would impact the partnership’s results. This will also result in increasing borrowing costs of Sunoco Logistics and depressing market value of its limited partner units.
Sunoco Logistics currently carries a Zacks Rank #5 (Strong Sell), implying that it is expected to significantly underperform the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked players in the energy sector like Athlon Energy Inc. (ATHL), Warren Resources Inc. (WRES) and Marathon Petroleum Corp. (MPC). All the stocks sport a Zacks Rank #1 (Strong Buy).