DKL - Delek Logistics Partners: A Safe High 9%+ Distribution Yield For 2022

• Delek Logistics Partners saw very strong operating cash flow growth on the surface during 2021, although this was mostly due to a large working capital draw.
• When looking ahead, they are once again planning to increase their distributions by 5% year-on-year during 2022 whilst also lifting their growth capital expenditure.
• Although higher than during 2020 and 2021, their capital expenditure will remain significantly lower than during 2018-2019 that produced the strong growth they have enjoyed in previous years.
• Even at best it appears that their distribution coverage will remain tight during 2022 and thus highlights that they have limited scope for further distribution growth.
• Since their unit price has trended lower since my previous rating, I still now believe that upgrading to a buy rating is once again appropriate.

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