Sunoco LP Poised to Outpace Exxon's and Chevron's Dividend Growth

For investors seeking high-yielding dividend stocks, the energy sector offers numerous opportunities. Two well-known players in this space are ExxonMobil and Chevron, which have a long history of steadily increasing their payouts to shareholders.

However, their growth rate is expected to remain modest over the next five years, with increases likely to be around 5% annually or less. For those looking for more substantial dividend growth, midstream companies like Sunoco LP (SUN) may provide a better option.

Sunoco LP has been following a similar playbook as its parent company, Energy Transfer, by consistently increasing its quarterly dividend payments. In fact, the pipeline operator has raised its payout for seven consecutive quarters, including a 1.25% increase in its most recent announcement.

While this growth rate is already impressive, Sunoco LP's acquisition of Offen Petroleum for $600 million earlier this month could potentially accelerate its dividend growth even further. The company expects the deal to be accretive and increase cash flow, which may enable it to exceed its stated goal of at least 5% annual distribution growth.