10.83% Dividend Yield and 10 Years of Consistent Payout Growth—Is This Oil & Gas Logistics Company Your Next Income Play?

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Imagine locking in a 10.83% dividend yield with a company that has consistently increased its dividend for over a decade. Now add strong operational cash flow supporting these payouts, and you've got a stock worth looking into. Let’s dive deeper into what makes this opportunity intriguing.

Meet Delek Logistics Partners LP (NYSE: DKL)

Financial Score: 81

Delek Logistics Partners (DKL) is not just another player in the oil and gas midstream sector. They’ve been paying quarterly dividends consistently since their founding in 2012, with their most recent payout at $1.09 per share, amounting to a robust $4.36 annual dividend​. This high-yield stock offers a 10.83% dividend yield, which is among the highest in its sector, making it particularly appealing for income investors​.

Quick Heads-Up

To keep your portfolio in good shape, make sure you're regularly checking the financials of the companies you're invested in. Stronger companies deliver better results, so it’s important to track their quarterly and annual reports.

Top-tier companies usually have a Financial Score of 80+, with the best hitting 90+. If you notice that score dropping below 80, it might be time to rethink your position before things go south.

Steady Dividend Growth and Payout Reliability

DKL has increased its dividend for the past 11 consecutive years, a rare achievement in the midstream sector, where volatility is often the norm​. The company’s dividend growth rate over the past decade has been around 5% annually, which is solid for a stock offering such a high yield. However, what really stands out is how they’ve managed to maintain this despite challenging market conditions.

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Balancing a High Payout Ratio

Yes, DKL’s payout ratio is currently high, sitting at 108.6%, meaning they are paying out more in dividends than they are earning​. On the surface, that might sound risky. However, the company’s focus on stable cash flow from its long-term contracts and infrastructure assets means they’ve been able to support these payouts through robust operational income. While you should keep an eye on this ratio, DKL’s history shows they’ve been able to consistently generate the necessary cash flow to maintain and grow their dividends​.

Strategic Acquisitions and Expanding Footprint

What’s even more interesting is how DKL has expanded its operations. In 2024, they closed on the acquisition of H2O Midstream, enhancing their water management capabilities in the Permian Basin. This move not only diversified their portfolio but also strengthened their infrastructure in one of the most active oil-producing regions in the U.S.​. Strategic acquisitions like this give the company more reliable cash flow, which helps them sustain their attractive dividend yield.

Conclusion: Is DKL the Right Fit for Your Portfolio?

With a 10.83% dividend yield, 11 consecutive years of dividend growth, and a company structure designed to generate stable cash flow, DKL is definitely a high-yield stock worth your attention​. That said, their 108.6% payout ratio warrants close monitoring, but their history of consistent payouts and smart acquisitions in the oil and gas logistics space suggest they have the tools to continue rewarding shareholders. If you’re looking for a high-yield play with strong fundamentals, DKL could be a solid addition to your portfolio.

And finally, while DKL’s Financial Score of 81 indicates strength, it’s worth taking a closer look at the company before jumping in to ensure it fits your long-term investment goals.

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