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Ranking 7 Refining Stocks Based on Their Dividend Yields

PART:
1 2 3 4 5 6 7 8
Part 2
Ranking 7 Refining Stocks Based on Their Dividend Yields PART 2 OF 8

PBF’s Dividend Yield: Number 1 among 7 Refiners

PBF’s dividend yield

PBF Energy (PBF) occupies the top slot in our list of seven dividend-yielding refining stocks. PBF is an American downstream company with refining and logistics operations. With a market cap of ~$3 billion, the company ranks sixth among the seven companies we’re covering in this series.

PBF has a current dividend yield of 4.5%. PBF made a dividend payment of $0.30 per share, which was announced on August 3, 2017, and paid on August 31. PBF has consistently paid dividends despite the recent refining margin volatility. 

Also, PBF’s dividends have remained stable during the last three years. PBF made a dividend payment of $0.30 per share on August 27, 2014.

PBF’s Dividend Yield: Number 1 among 7 Refiners

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Valuations

PBF Energy traded at a forward PE (price-to-earnings) ratio of 7.4x in 2Q14. PBF’s current forward PE stands at 15.8x, denoting a sharp rise in valuations in the past three years.

However, PBF’s current forward PE ratio stands below the peer average of 16.0x of the six refiners (excluding DK, as we discussed in the previous part). PBF has strong growth prospects but could stand below its peer average because of the RINs burden.

PBF has enhanced its refining capacities as well as its logistics capabilities with acquisitions in the past few years. PBF acquired the Chalmette refinery, which grew PBF’s commercial footprint in PADD 3. Plus, PBF acquired the Torrance refinery from ExxonMobil (XOM), which provided a strong foothold in PADD 5.

Now, PBF is spending on enhancement and turnaround projects at both refineries to improve their returns. Plus, PBF’s midstream MLP PBF Logistics (PBFX) is expanding via dropdowns.

However, when it comes to RINs, PBF’s earnings are being dented quarter-over-quarter by the volatile RINs purchase expense. Like PBF, Valero Energy (VLO) and HollyFrontier (HFC) also have been reeling under the unstable RINs cost.

In its 2Q17 earnings transcript, PBF’s CEO, Tom Nimbley stated, “RINs have been and continue to be a headwind and a headache. We have been disappointed in the administration’s lack of movement on RIN reform to date.”

Move to the next part to see which company’s dividend yield stands second in our survey.

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