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