Refining stocks’ dividend yields
In this series, we’ll be ranking refining stocks in terms of their dividend yields. We’ll also analyze whether dividends paid by these companies have risen, fallen, or remained steady in the past three years. Then we’ll review their forward valuations.
A dividend yield measures annualized dividends as a percentage of the stock price. If we rank refining stocks on their current dividend yields, then PBF Energy (PBF) is at the top. It’s followed by Valero Energy (VLO) and Phillips 66 (PSX). The company with the lowest current dividend yield is Delek US Holdings (DK).
In the last three years, refining companies have borne the volatility in the refining margin environment. Despite the instability, the companies have paid dividends to their shareholders. All of them have paid dividends consistently. PBF’s dividend payment has been stable, while Valero Energy (VLO), Phillips 66 (PSX), HollyFrontier (HFC), Andeavor (ANDV), and Delek US Holdings (DK) have also raised their dividend payments.
The average forward PE (price-to-earnings) multiple of these refiners is 12.8x. PBF, VLO, and ANDV are trading below their average forward PE multiples. The remaining stocks are above their average forward PE multiples.
Delek US Holdings (DK), which is last in terms of current dividend yield, has the highest forward PE multiple at 16.1x. PBF, which is first in terms of current dividend yield, has the lowest forward PE multiple. If you look at the above chart, you’ll see that from VLO to MPC, the stocks are in a declining order of their dividend yields but a rising order for their forward valuations. However, ANDV looks like an exception with a lower dividend yield and a lower forward PE multiple. In fact, ANDV is the only stock to see a decline in its forward PE multiple in the past three years. Other stocks have seen a rise in their valuations in the same period.
In the rest of this series, we’ll look at individual companies’ dividend yield trends, starting with PBF.