DKL - Delek Logistics Partners: Distribution Growth Will Soon Come To A Grinding Halt

• Delek Logistics Partners continued their solid history of distribution growth into 2021 by increasing their already high 9% distribution yield once again.
• They performed very well during 2020 despite the severe economic downturn and thankfully the outlook for the distributions during 2021 now appears safe.
• Despite this positivity, their distribution growth is nevertheless still likely to come to a grinding halt sooner rather than later.
• If they were to continue increasing their distributions by 5% per annum then they will soon run out of free cash flow even though their capital expenditure is already reduced to the barebones.
• At the end of the day, a high distribution yield is already desirable and since it now appears safe, I believe that upgrading my rating to bullish is appropriate.

For further details see: