Sunoco's 14% Yield: Too Good to Be True?
Fuel distributor Sunoco LP's (NYSE: SUN) latest payout to investors makes the yield on this master limited partnership, or MLP, a whopping 14%. Yields that high often make investors skeptical about a company's ability to sustain such a lofty payout. But this huge distribution may come less from what the company's doing, and more from the way it's incorporated.
On April 2, Sunoco announced that it would distribute $0.8255 per unit to its investors. Anyone holding units as of May 7 would receive the distribution on May 19.
Sunoco is a wholly owned subsidiary of midstream oil-and-gas transporter Energy Transfer (NYSE: ET), and both are master limited partnerships (MLP). A company can be incorporated in many ways; publicly traded companies are mostly limited liability companies, or LLCs. Dallas-based Sunoco operates as an MLP instead, distributing refined fuel to gas stations and businesses via trucks and pipelines.
Source Fool.com
