Ranking 7 Refining Stocks Based on Their Dividend Yields
Refining stocks’ dividend yields
In this series, we’ll rank seven refining stocks in terms of their dividend yields. We’ll analyze whether dividends paid by the companies have risen, fallen, or remained steady in the past three years. We will also review their forward valuations.
A company’s dividend yield measures annualized dividends as a percentage of stock price. If we rank the integrated energy stocks on their current dividend yields, then PBF (PBF) occupies the top slot. PBF is followed by HollyFrontier (HFC) and Valero Energy (VLO). The company with the lowest current dividend yield is Andeavor (ANDV).
Interested in PBF? Don't miss the next report.
Receive e-mail alerts for new research on PBF
In the past three years, refining companies have borne the volatility in the refining margin environment. Despite this instability, these companies have paid consistent dividends to their shareholders.
Delek US Holdings (DK) and PBF Energy (PBF) have paid dividends steadily. Valero Energy (VLO), Phillips 66 (PSX), HollyFrontier (HFC), and Andeavor (ANDV) have boosted their dividend payments. However, Marathon Petroleum’s (MPC) current dividend payments stand lower than its payments reported three years ago.
If we look at these companies’ valuations in terms of their forward price-to-earnings (or PE) ratios, Delek US Holdings (DK) is an outlier. DK ranks sixth in terms of current dividend yield, and it has the highest forward PE of 38.6x.
If we exclude DK, the average forward PE ratio of the remaining six refiners would stand at 16.0x. The stocks placed below the average forward PE ratio are PBF Energy (PBF), Valero Energy (VLO), and Andeavor (ANDV).
Valero Energy (VLO) has the lowest forward PE of 14.4x. VLO ranks third in terms of dividend yield at 3.7%. Similarly, if we look at PBF Energy, the top dividend-yielding company, it trades at a forward PE of 15.8x. Andeavor (ANDV), which ranks last in terms of dividend yield, has a lower forward PE of 15.2x.
In this series, we’ll look at these companies’ dividend yield trends, starting with PBF Energy.