We recently published a list of Dividend Contenders List: Top 15. In this article, we are going to take a look at where Delek Logistics Partners, LP (NYSE:DKL) stands against other top dividend contenders.
Dividend stocks have remained a popular choice among investors due to the steady income they provide, becoming even more attractive when payouts grow over time. Many investors look for companies with a track record of consistently increasing dividends, as this ensures rising income in the long run. However, maintaining steady dividend growth is no easy feat. For example, “dividend aristocrats” are companies that have raised their dividends for at least 25 consecutive years, a distinction achieved by only about 68 US companies. This highlights the difficulty of sustaining such a standard. Nonetheless, numerous companies continue to build strong, albeit shorter, histories of dividend growth, demonstrating resilience and the potential to reach new milestones. “Dividend contenders” are those that have consistently increased their dividends for at least 10 years, though they have yet to attain the 25-year benchmark required to be classified as long-term dividend growers.
Dividend stocks appeal to investors because they help cushion portfolios against market downturns while still offering growth opportunities. Historically, investment strategies centered around dividends have demonstrated stability across various regions and market cycles. A report by Franklin Templeton noted that over the three years leading up to December 31, 2024, companies that pay dividends experienced lower volatility and smaller declines compared to the broader market in global, US, and European markets. When inflation and interest rate concerns reemerged in August 2024, dividend stocks remained relatively steady.
Companies that pay regular dividends often belong to non-cyclical industries such as consumer staples, utilities, and healthcare, which tend to be more resilient during economic downturns. As 2025 began, growing concerns over rising inflation and slowing economic growth led investors to increase their exposure to defensive stocks, aiming to protect their portfolios from potential market volatility.
Ned Davis’s Clissold and his team made the following comment on the situation:
“One would expect that companies that pay dividends are more stable and have lower growth rates. As a result, they should rally less in up markets and decline less in down markets. In other words, they have lower betas than non-dividend-payers. … As a group, dividend-payers have a beta of 0.99 versus 1.11 for nonpayers.”
Investors tend to favor companies with a track record of consistently increasing their dividend payouts. A study by Nuveen found that firms initiating or raising dividends have historically outperformed in the three years following a Federal Reserve interest rate hike. Dividend growth is often linked to solid corporate earnings. In February, the overall market faced challenges, slipping more than 2% as investors reacted to inflation worries, potential tariffs linked to former President Donald Trump, and rising geopolitical tensions. On February 28, the major index briefly turned negative for the year. However, fourth-quarter earnings reports have emerged as a new driving force, helping to support market sentiment.
Companies continued to boost their dividend payouts in the fourth quarter of 2024. According to a report from S&P Dow Jones Indices, a total of 635 companies raised their dividends during the quarter, amounting to $14.2 billion. Over the full year, total dividend increases climbed to $71.4 billion, up from $65.1 billion the year before. Given this, we will take a look at some of the best stocks in our dividend contenders list.
Our Methodology
This list focuses on dividend contenders—companies known for raising their dividends consistently for 10 years but less than 25. From this group, we selected prominent companies with the highest dividend yields as of March 12 and ranked from lowest to highest yield.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A engineer overseeing a exposed network of pipelines connected to tanks at an oil refinery.
Delek Logistics Partners, LP (NYSE:DKL)
Dividend Yield as of March 12: 10.73%
Delek Logistics Partners, LP (NYSE:DKL) is an American midstream and logistics company that specializes in the transportation and storage of crude oil, refined products, and other liquid hydrocarbons. In the fourth quarter of 2024, the company posted revenue of over $209.8 million, which fell by 17.4% from the same period last year. However, it achieved a record Adjusted EBITDA of $107.2 million in the fourth quarter of 2024, reflecting a 6% increase from the previous year. The company reported a net income of $35.3 million for the quarter, with $34.5 million attributable to limited partners, equating to $0.68 per diluted common limited partner unit.
Delek Logistics Partners, LP (NYSE:DKL) is pursuing an ambitious expansion strategy to establish itself as a comprehensive midstream services provider in the Permian Basin. Over the past year, the company completed multiple acquisitions and outlined plans to invest $75 million in expanding the Libby processing plant, along with allocating $160 million for growth and maintenance projects in 2025. DKL has also projected strong financial performance, setting its full-year 2025 adjusted EBITDA guidance between $480 million and $520 million, reflecting an expected 20% increase. In addition, a $150 million share buyback from its sponsor has been approved.
In the most recent quarter, Delek Logistics Partners, LP (NYSE:DKL) reported an operating cash flow of $49.9 million and its distributable cash flow came in at $69.5 million. On January 24, the company announced a 1% increase in its quarterly dividend, raising it to $1.105 per share. This milestone extended the company’s streak of consecutive dividend growth to 48 quarters, which makes DKL one of the best stocks on our dividend contenders list. As of March 12, the stock has a dividend yield of 10.73%.
Overall, DKL ranks 1st on our list of top dividend contenders. While we acknowledge the potential for DKL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DKL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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