Sunoco LP Quietly Builds Dividend Growth Pipeline

Sunoco LP is an often-overlooked pipeline company that has been quietly raising its dividend for seven consecutive quarters, outpacing many integrated oil stocks. The company's most recent increase of 1.25% marked a continuation of its stated objective to achieve a 'multi-year distribution growth rate of at least 5%'.

With a yield of 5.3%, Sunoco LP currently offers investors a higher payout than many integrated oil equities, such as ExxonMobil and Chevron. The company's net leverage ratio of 3.98x is considered healthy by executives, and its commitment to debt management and dividend growth suggests that it may exceed its stated payout growth rate.

Sunoco LP recently announced the acquisition of Offen Petroleum for $600 million in cash, which will be accretive and increase cash flow for distribution growth. While this deal isn't a guarantee of higher-than-5% dividend growth, it's possible that the acquisition could pave the way for such increases starting next year.