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Analyzing HollyFrontier’s Dividend Yield

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Jun. 11 2019, Updated 11:07 a.m. ET

HollyFrontier’s dividend yield

HollyFrontier (HFC) has a current dividend yield of 3.3%, which is lower than PBF Energy (PBF), Valero Energy (VLO), and Marathon Petroleum (MPC). PBF Energy, Valero Energy, and Marathon Petroleum’s dividend yields are 4.84%, 4.81%, and 4.51%, respectively. While PBF Energy and Marathon Petroleum have above-average debt, Valero Energy seems attractive with lower debt. We’ll discuss HollyFrontier’s yield and stock position.

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HollyFrontier stock has a market cap of $7 billion. The stock has fallen 19% in the second quarter. HollyFrontier has made a dividend payment of $0.33 per share in the second quarter—the same as the previous year. The dividend was announced on May 8 and paid on June 5. HollyFrontier repurchases shares to return wealth to shareholders. In the first quarter, HollyFrontier provided shareholder returns of $57 million through dividends and $78 million through stock repurchases.

Valuations

HollyFrontier trades at a current forward PE ratio of 5.2x, which is below the peer average of 5.4x. PBF Energy and Valero Energy also trade below the average at forward PE ratios of 4.5x and 5.3x, respectively. Marathon Petroleum (MPC) trades at a forward PE ratio of 5.8x.

HollyFrontier has a dull earnings outlook for the year. Analysts expect the company’s earnings to fall 30% in 2019 due to narrowing oil spreads and weakening base oil cracks.

However, HollyFrontier has sound financials with a favorable debt and liquidity position. The company focuses on growth activities. HollyFrontier continues to expand its lubricant segment, modernize its refining operations, and strengthen its midstream operations. These activities could result in better earnings in the coming years.

HollyFrontier has a weak dividend yield with a lower valuation. The company has sound financials and strong expansion activities.

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