CrossAmerica Partners Outlook Remains Robust
Some ultra-high-yield dividend stocks simply go from strength to strength. And that’s the case right now with CrossAmerica Partners LP (NYSE:CAPL). The company continues to report solid financial results and provide a reliable ultra-high-yield dividend, its longer-term outlook remains robust, and its stock is easily outpacing the broader market.
CrossAmerica Partners LP is a leading U.S. wholesale distributor of motor fuels that also operates convenience stores and owns/leases real estate used in the retail distribution of motor fuels. (Source: “Q4 2024 Earnings Call Presentation,” CrossAmerica Partners LP, November 7, 2024.)
With a geographic footprint that spans 34 U.S. states, CrossAmerica Partners distributes branded and unbranded petroleum for motor vehicles to over 1,800 locations. It also operates seven convenience stores at more than 250 locations across 10 states in the eastern U.S. The sites offer food, various essentials, and car washes. Some locations are paired with such prominent national brands as “Arby’s,” “Dunkin’,” and “Subway.”
This is an important combination. Businesses with a diversified revenue mix that includes more stable predictable revenue from convenience stores and restaurants have done better than gas stations that don’t have that this mix.
Because of diversified operations, North American service station sales are projected to grow from $12.6 billion in 2023 to $20.44 billion in 2031, expanding at a compound annual growth rate of 7.15%. (Source: “North America Filling Station and Gas Station Market by Application | Projections,” LinkedIn, September 30, 2024.)
Solid Fourth-Quarter Results
For the fourth quarter ended December 31, 2024, CrossAmerica Partners reported net income of $16.9 million, up slightly from $16.7 million in the same prior-year period. (Source: “CrossAmerica Partners LP Reports Fourth Quarter and Full Year 2024 Results,” CrossAmerica Partners LP, February 26, 2025.)
The company reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $35.5 million, down from $47.6 million in the fourth quarter of 2023.
Its distributable cash flow was $21.1 million.
CrossAmerica’s retail segment performed well, with gross profit increasing 8.8% to $75.1 million. The retail segment sold 141.4 million gallons during the fourth quarter, up 13.5% over the fourth quarter of 2023.
During the fourth quarter, the company sold 11 sites for $17.3 million, resulting in a net gain of $11.6 million.
CrossAmerica’s full-year net income was down at $22.5 million, while its adjusted EBITDA came in at $145.5 million, with distributable cash flow of $86.0 million. For the full year, the retail segment sold 554.5 million gallons of gasoline, up 9.5% from the 506.5 million gallons sold in 2023.
For the 12 months ended December 31, 2024, CrossAmerica sold 30 properties for $36.3 million in proceeds, resulting in a net gain of $23.3 million.
Commenting on the results, Charles Nifong, the company’s president and chief executive officer, said, “We delivered a solid fourth quarter, with growth in our same-store retail gallons and sales, though our financial performance did not match the record levels of the prior year.”
Adding, “While our full-year results were impacted by a challenging first quarter and inflationary pressures on our core retail customers, we remain confident in the strength of our business, the execution of our strategy, and the foundation we have built for future growth.”
Maintains Quarterly Distribution of $0.5250/Unit
Thanks to CrossAmerica’s reliable cash flow from real estate rental income and motor fuel distribution, it is able to provide income investors with a reliable, high-yield distribution.
This past January, it declared a dividend of $0.5250 per share, or $2.10 on an annual basis, for a forward yield of nine percent. (Source: “CrossAmerica Partners LP Maintains Quarterly Distribution,” CrossAmerica Partners LP, January 25, 2025.)
That distribution is safe, too. The company targets a coverage ratio of 1.2x. Its coverage ratio for the trailing 12 months ended September 30, 2024, was 1.08 times.
CAPL Units Hit Record High
With fears of a full-on trade war and talk of a recession, it’s difficult to find high-yield dividend stocks, or any stocks for that matter, hitting record highs. That’s not the case with CAPL. After hitting a new record high of $23.97 on March 3, the units continue to trade near that level.
As of March 11, CAPL units are up:
- Five percent over the last month
- Nine percent year to date
- 20% over the last six months
- 18% year over year
- 15% since we looked at it in August 2024
Chart courtesy of StockCharts.com
The Lowdown on CrossAmerica Partners LP
CrossAmerica Partners LP is an energy partnership that has a history of providing investors with great long-term capital appreciation and a reliable ultra-high yield distribution.
It reported solid fourth quarter results, continues to have a strong balance sheet, and maintained its unit distribution too. Management seems upbeat on its outlook too. Which is good news, since insiders hold 52.46% of all shares. The high insider interest should entice management to deliver strong results. (Source: “CrossAmerica Partners LP (CAPL),” Yahoo! Finance, last accessed March 11, 2025.)
Meanwhile, 73 institutions hold 23.78% of all outstanding shares. Some of the biggest holders include Invesco Ltd, Mirae Asset Global ETFs Holdings Ltd, ClearBridge Investments, LLC, and JPMorgan Chase & Co.