Updated 4/25/25
Delek Logistics Partners (NYSE: DKL) operates a network of pipelines, storage terminals, and other midstream infrastructure primarily across the Permian Basin. Structured as a master limited partnership, the company consistently delivers income to unitholders through quarterly distributions, which it has raised for 48 consecutive quarters. Recent earnings showed solid growth, with adjusted EBITDA rising 6% year-over-year and management reaffirming its long-term commitment to expansion and capital returns. With a forward yield over 11% and a focus on fee-based revenue from third-party customers, DKL continues to position itself as a dependable cash-flow generator.
Recent Events
Over the last year, DKL’s stock has had a rougher ride compared to the broader market. While the S&P 500 gained about 7.5%, DKL slid roughly 4.8%. Shares are now trading around $38.40, down from a 52-week high of $45.71 but still above the low point of $34.59.
Looking at trading volumes, interest has stayed pretty steady. The three-month average daily volume is about 211,000 shares, ticking up slightly to 227,000 shares over the past ten days. That kind of subtle increase can sometimes hint that more investors are beginning to take a second look, especially with the stock offering such a high yield.
Financially, DKL’s last reported figures were a mixed bag. Revenue dropped by 17.4% year over year, which normally would be a cause for concern. Yet earnings per share grew an impressive 59.4%. That shows the power of cost control and operating leverage at work, where even with lower sales, profits can still climb.
Net income stood at $141.9 million on $940.6 million in revenue. Not bad at all. But what really jumps out is the debt: DKL is carrying about $1.89 billion in total debt, which translates to an eyebrow-raising debt-to-equity ratio of over 5,300%. Even for an MLP, that’s extreme, and it’s something that could put pressure on the business if rates stay high or markets tighten.
Key Dividend Metrics
Here’s a quick glance at the key numbers, complete with some visual flair:
🔵 Forward Dividend Yield: 11.56%
🟢 Trailing Dividend Yield: 11.42%
🟡 Forward Annual Dividend Rate: $4.42
🟠 5-Year Average Dividend Yield: 9.52%
🟣 Payout Ratio: 144.31%
With a forward yield above 11%, DKL offers one of the juiciest payouts in the market today. But that payout ratio sitting at over 140% tells a more complicated story that investors shouldn’t ignore.
Dividend Overview
DKL’s dividend is clearly the centerpiece of its investment appeal. Management has consistently nudged payouts higher, treating its investors well over the years. The most recent annualized distribution was $4.36 and is projected to rise to $4.42 going forward.
That sort of consistency is rare, especially in sectors tied to energy. But digging a little deeper, it’s clear that not all the funding for these payouts comes from operating cash flow. Levered free cash flow was actually negative, coming in at about -$36.3 million over the past twelve months.
Still, when evaluating MLPs like DKL, it’s more appropriate to focus on distributable cash flow (DCF) rather than free cash flow or earnings per share. Historically, DKL’s DCF coverage ratio has floated around 1.1 to 1.2 times, suggesting the company generally earns just enough to cover its dividends, with a little cushion.
One positive for investors is that DKL has not cut its payout even during tougher stretches in the oil market. That sort of track record builds trust and indicates management’s clear commitment to delivering income, even if it means leaning on debt or asset sales from time to time.
Dividend Growth and Safety
DKL’s approach to dividend growth has been more steady than spectacular. Over the past five years, dividend increases have been modest, usually in the low to mid-single digits. That might not light up a growth investor’s radar, but for income-focused portfolios, that kind of slow, reliable climb can be exactly what you want.
Safety is where the conversation gets a little trickier. On the positive side, DKL sports a current ratio of 1.64, indicating that it can comfortably cover short-term liabilities. Operating margins are healthy too, coming in at 18.26%, which supports stable earnings even if revenue growth hits a few bumps.
However, the heavy debt load can’t be ignored. With interest rates still elevated compared to where they were just a few years ago, servicing that mountain of debt gets more expensive. And while DKL’s enterprise value to EBITDA multiple of roughly 10 times isn’t outrageous, it does suggest the market sees some risk.
Revenue softness is another thing to watch closely. A 17% year-over-year decline isn’t a rounding error — it’s a real number. If that trend continues, DKL might find it harder to maintain its generous payout without making some tough financial decisions.
For now, though, the fundamentals are still holding up. Fee-based revenues provide a strong backbone, insulating the business from wild commodity price swings. As long as DKL can keep its cash flows steady and manage its debt, that big, beautiful dividend should keep rolling in — even if it requires a little financial engineering along the way.
Cash Flow Statement
Over the trailing twelve months, Delek Logistics Partners generated $206.3 million in operating cash flow, a modest step down from $225.3 million in the prior year. This indicates consistent cash generation from the core business, even with some revenue softness. Free cash flow came in at $74.5 million, down from $125 million the year before, largely impacted by higher capital expenditures totaling nearly $132 million. While still positive, this shrinking free cash flow signals some tightening in financial flexibility.
On the investing side, cash outflows spiked to $384.6 million, a sharp jump from $89.6 million in 2023. This suggests a significant uptick in capital deployment, possibly tied to expansion projects or asset acquisitions. Meanwhile, the company was active in the financing markets—raising $2.39 billion in debt while repaying $2.2 billion, alongside a $70.8 million capital stock repurchase. These moves helped keep liquidity afloat but left the company with just $5.4 million in ending cash. Taken together, DKL’s cash flow profile reflects a business that’s still delivering income but leaning heavily on financial engineering to support distributions and capital initiatives.
Analyst Ratings
🔵 Delek Logistics Partners (NYSE: DKL) has recently seen a mix of analyst opinions, reflecting both optimism and caution. Raymond James maintained its “Outperform” rating in late January 2025, nudging the price target up from $44 to $46. This move signals confidence in DKL’s ability to continue generating stable cash flow even with headwinds in the energy sector. Truist Securities also reaffirmed its “Buy” rating back in November 2024, lifting the price target from $46 to $50, highlighting a positive view on DKL’s operational execution and dividend consistency.
🟠 On the flip side, Bank of America initiated coverage with an “Underperform” rating in October 2024, setting a lower price target of $36. The caution stems mainly from DKL’s high leverage and concerns about the sustainability of its generous dividend, especially if macroeconomic pressures build up or if operational costs rise unexpectedly.
🟣 Overall, the consensus among analysts places the average 12-month price target for DKL around $44.25, with the range stretching from a low of $36 to a high of $50. This spread in estimates shows that while some believe DKL’s steady cash flows will continue to support its payouts, others are keeping a close watch on its debt levels and overall financial resilience.
Earning Report Summary
Delek Logistics Partners closed out 2024 on a strong note, delivering a fourth quarter that showed steady growth and some exciting moves for the future. Net income for the quarter came in at $35.3 million, with adjusted EBITDA hitting $107.2 million. That’s about a 6% bump over last year’s results, showing that even in a tougher environment, DKL found ways to keep moving forward. A big part of that momentum came from increased contributions across their Delaware Gathering systems, new volume from the H2O Midstream acquisition, and the ramp-up of their stake in the Wink to Webster pipeline.
In line with their history of rewarding investors, DKL also bumped up their quarterly distribution again, marking the 48th consecutive increase. The new payout now sits at $1.105 per unit. For those who appreciate consistency, that kind of record is tough to beat, especially in a sector where volatility often takes center stage.
Leadership’s Take on the Quarter
President Avigal Soreq didn’t hold back in calling 2024 a transformative year for Delek Logistics. He pointed out that the company has now fully stepped into its role as a major midstream player in the Permian Basin, an area that’s critical to U.S. energy production. He was particularly enthusiastic about the January 2025 acquisition of Gravity Water Midstream, a move that pushes third-party cash flow contributions up to around 70 percent. That’s important because it means DKL is becoming less dependent on its parent company and building a business that can stand firmly on its own.
Looking ahead, Soreq outlined several strategic expansions that should help fuel continued growth. He mentioned upgrades to the Libby processing plant and plans to add new acid gas injection and sour gas treating capabilities. These projects are aimed at keeping DKL competitive as oil and gas production in the Permian continues to evolve.
Setting the Stage for 2025
DKL is entering 2025 with a lot of confidence. Leadership rolled out a fresh $150 million buyback authorization, showing they believe their stock is undervalued and worth investing in themselves. They also set full-year adjusted EBITDA guidance between $480 million and $520 million, signaling expectations for another year of solid cash flow.
Altogether, Delek Logistics is showing that it’s not just focused on maintaining payouts but actively working to grow and strengthen the business behind those distributions. Between steady operational execution and strategic acquisitions, DKL is positioning itself for a strong future while continuing to reward its unitholders.
Chart Analysis
DKL has shown an interesting blend of strength and volatility over the past year, with price action that reveals both opportunity and caution. From early summer through the end of the year, the stock gradually climbed from the $35–36 range, pushing past $42 by January. That steady upward momentum, especially from November into early February, coincided with a bullish cross where the 50-day moving average moved above the 200-day average — a technical pattern that often signals positive trend strength.
Moving Averages and Trend Shifts
That upward trend didn’t last uninterrupted. In the last two months, the 50-day moving average has curved lower while the price fell below both moving averages, which is generally not a great look from a momentum standpoint. Still, price is now attempting a bounce from the $36 level, which previously acted as support several times over the year. The 200-day average has held steady and slightly upturned, suggesting that longer-term stability may not be entirely broken yet.
Volume and Relative Strength
Volume remains light overall, with occasional spikes hinting at scattered bursts of buying or selling interest. These volume pops didn’t sustain large directional moves, showing that conviction may still be lacking in either direction.
Looking at the RSI, there’s been a clear cycle of overbought readings in late December and again in March, followed by a sharp dip into oversold territory in April. That low RSI reading coincided with the recent price bottom, suggesting a bounce was likely — and that’s exactly what has played out into late April.
Price Action and Outlook
The recent reversal off April’s lows, combined with an RSI climbing off oversold conditions, points to a short-term recovery. However, until the stock reclaims the 50-day and 200-day averages with some consistency, confidence in a full trend reversal remains limited. That said, the longer-term range between $36 and $42 appears to be the band where DKL has found buyers and sellers repeatedly over the last 12 months.
Overall, the chart shows a name that has held up better than most when volatility hits, but also one that’s susceptible to pullbacks. The way the stock reacts in the coming weeks to the overhead moving averages could give a clearer sense of whether the recent rally has legs or is just a technical bounce within a broader consolidation.
Management Team
Delek Logistics Partners is led by a team that combines deep operational experience with a focus on long-term financial discipline. At the center is Avigal Soreq, who has brought a strategic and measured approach to expanding the company’s reach, particularly in the Permian Basin. His leadership emphasizes stable growth, reliable distributions, and thoughtful capital allocation, all of which have played a role in the company’s ability to increase its quarterly payout consistently.
The rest of the leadership team has stayed focused on executing the fundamentals—efficient operations, long-term contracts, and steady fee-based income. Their ability to navigate volatile energy markets without sacrificing stability has helped support the company’s consistent distribution history. The management team continues to prioritize growth through strategic acquisitions, while also making sure that expansion doesn’t come at the cost of financial health. With third-party revenue now making up a larger share of the business, there’s been a clear move toward reducing reliance on its parent company and broadening its independent footprint.
Valuation and Stock Performance
DKL has traded in a range over the past year, from a low of about $34 to a high just shy of $46. Most recently, shares have settled closer to the lower end of that spectrum. The stock has seen some cooling off after a strong run into early 2024, likely a combination of broader weakness in income-oriented stocks and concerns about the impact of rising interest rates on leveraged names.
In terms of valuation, the company currently trades at around 12.8 times trailing earnings and approximately 10 times enterprise value to EBITDA. That places it in line with industry peers, neither overly expensive nor particularly discounted. What stands out is the double-digit dividend yield, currently above 11 percent. That income stream has remained a key draw, especially in a market where reliable yield is increasingly hard to find.
The technical setup shows that DKL has dipped below both its 50-day and 200-day moving averages, which often suggests short-term pressure. Still, the stock has held a support level near $36 on multiple occasions, which gives the current price some footing. Until momentum returns, price movement may remain range-bound, but the underlying story is one of income consistency rather than rapid capital appreciation.
Risks and Considerations
The most obvious risk for DKL is its leverage. With a debt-to-equity ratio well above industry norms, the company relies heavily on debt markets to fund operations and acquisitions. That’s manageable in a low-rate environment, but can become a strain if rates remain elevated or access to capital tightens.
Cash flow coverage is another area to watch. While operating cash flows remain strong, free cash flow has been under pressure, and levered free cash flow has turned negative in recent periods. This raises questions about how comfortably the company can continue funding its distributions without relying on external financing or asset sales.
There’s also operational risk. While the company benefits from long-term contracts and a fee-based model, volumes still matter. A sustained downturn in production or a slowdown in demand for transportation and storage could impact revenue. The company has made progress in reducing its dependence on its parent, but that relationship still exists, and changes at the parent company could influence DKL’s operations.
Finally, regulatory and environmental oversight presents a long-term risk. As with all companies in the oil and gas logistics sector, any changes in policy or compliance rules could require additional investment or lead to disruptions in service.
Final Thoughts
DKL offers a compelling combination of steady cash flow, a strong yield, and management focused on long-term value creation. While it’s not without risk, particularly in terms of leverage and cash flow sensitivity, the company has shown it can navigate these challenges while maintaining its payout history. Strategic acquisitions have expanded its asset base, and an increasing share of third-party revenue shows its commitment to building an independent and durable platform.
From a valuation perspective, the stock is currently in a softer phase, but long-term fundamentals remain intact. The income stream it provides is hard to overlook, especially for those seeking steady distributions. As long as the company continues to deliver on operational performance and keeps its debt in check, it’s likely to remain a reliable name in its space.