What’s in Store for Valero Energy?

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Part 10
What’s in Store for Valero Energy? PART 10 OF 17

How Analysts View Valero’s Dividend Payment in 3Q17

Valero’s dividend payment

Valero Energy’s (VLO) dividend payments have been rising steadily in the past few years. In 3Q17, Valero paid a dividend of $0.70 per share, which represents a 75% growth from 3Q15. The dividend was announced on July 21, 2017, and paid on September 7, 2017.

How Analysts View Valero’s Dividend Payment in 3Q17

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Wall Street analysts expect Valero’s dividend per share to stay stable in 4Q17 at $0.70 per share. This could have occurred because Valero has already raised its dividend payment in 1Q17. Also, if we look at past two-year trend, Valero has increased its dividend payments in the first quarter of every year.

In the current quarter, regional refining margin indicators and RINs (Renewable Identification Numbers) costs have shown mixed trends. While regional refining margin indicators have increased quarter-over-quarter, RINs expenses have also risen.

All four of VLO’s operational regions have seen an increase in average zonal cracks in 3Q17 compared to 2Q17. This points toward the possible growth in VLO’s refining margins in 3Q17 compared to 2Q17. However, the rising RINs cost is likely to dent earnings for the quarter.

Valero’s dividend yield

Valero’s current dividend yield stands at 4.2%. This has risen from 2.7% in 3Q15. The rise in yield is due to the steeper increase in dividend compared to the increase in Valero’s stock price in the stated period.

Peers’ dividend yield

Marathon Petroleum’s (MPC) dividend yield increased from 2.3% in 3Q15 to the current level of 3.0%. Phillips 66’s (PSX) dividend yield increased from 2.8% to 3.2% in the same period. Comparatively, the SPDR S&P 500 ETF’s (SPY) dividend yield rose from 1.8% in 3Q15 to its current level of 1.9%.

Andeavor’s (ANDV) dividend yield rose even sharply from 1.7% to 2.3%. Smaller players like Delek US Holdings (DK) and HollyFrontier’s (HFC) dividend yields soared from 1.7% and 2.7%, respectively, in 3Q15, to current levels of 2.3% and 4.1%, respectively.

Now, let’s move onto to the next part to see how analysts rate Valero.


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