Reduced Dividend Payouts Could Be Coming for These High-Yield Stocks

Companies that operate energy-related infrastructure had been a top choice for income-seeking investors before the oil market downturn. That's because these entities typically generate gobs of cash flow, which allowed them to offer mouth-watering high-yields at a time when most other investments didn't pay very well. However, the oil price collapse exposed a fatal flaw in the business model of many of these companies, which is that they had enough exposure to commodity prices to cause a problem, especially given their reliance on the debt and equity markets to finance growth.

As a result, many have slashed their payouts in recent years to get their finances back on solid ground. More such payout reductions could be on the way, and Energy Transfer Partners (NYSE: ETP), Targa Resources (NYSE: TRGP), and Sunoco LP (NYSE: SUN) are prime candidates for dividend cuts.

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Source: Fool.com