Delek’s cash flow analysis
Delek US Holdings’ (DK) cash balance remained flat year-over-year at $377 million in 2Q16. Delek’s cash balances fell in 4Q15 but improved in the past couple of quarters. The improvement was due to higher cash inflow from operations combined with lower cash outflow on account of investing (capex and acquisition).
Delek’s cash flow from operations and investing
Delek’s cash flow from operations has been volatile in the past few quarters. In 2Q16, DK’s cash from operations stood at $85 million compared to $135 million in 2Q15, mainly due to the fall in refining earnings.
In 2Q16, DK’s cash outflow on account of investing activities stood at $25 million, lower than in 2Q15. DK saw a spike in investing outflows to $267 million in 2Q15 as a result of the purchase of a stake in Alon USA Energy (ALJ).
Delek’s cash flow from financing
Delek’s cash flow from financing activities mainly comprises of changes in debt, dividend payments, and share buybacks. The company has raised funds as well as repaid debt from 2Q15 to 2Q16, adapting to the changing cash flow environment.
Plus, DK has consistently rewarded shareholders with dividends. The company has also repurchased shares according to its cash flow position. DK repurchased shares to the tune of $3 million in 2Q16 compared to no repurchases in 2Q15.
In 2Q16, Delek’s (DK) dividend per share remained flat compared to 2Q15. Even though DK’s dividends remained flat, the fall in DK’s stock price led to a rise in DK’s dividend yield to 3.5% from 2.2% in 2Q15. Delek’s peers Western Refining (WNR), Marathon Petroleum (MPC), and HollyFrontier (HFC) currently trade at a dividend yield of 5.8%, 3.5%, and 5.5%, respectively.
Shareholder yield shows total shareholder returns including dividends and share repurchases (in the trailing 12 months) as a percentage of market capitalizations. With a fall in its market cap, steady dividends, and a rise in share repurchases, Delek’s shareholder yield has risen from 4.5% in 2Q15 to 9.8% in 2Q16. If you’re looking for exposure to high dividend stocks, you can consider the Vanguard High Dividend Yield ETF (VYM). The ETF also has ~10% exposure to energy sector stocks.