Phillips 66’s dividend yield
Phillips 66 (PSX) has a current dividend yield of 4.2%, which is better HollyFrontier (HFC) and Delek US Holdings (DK). HollyFrontier and Delek US Holding have lower dividend yields of 3.3% and 3.1%, respectively. While HollyFrontier has below-average debt, Delek US Holdings has a high debt burden. We’ll discuss Phillips 66’s yield and stock position.
Phillips 66 stock has the largest market cap of $39 billion. Phillips 66 stock has fallen 10% in the second quarter. Phillips 66 has made a dividend payment of $0.9 per share in the second quarter—13% YoY growth. The dividend was announced on May 8 and paid on June 3. Since May 2012, Phillips 66’s dividends have grown at a compound annual growth rate of 25%. Phillips 66 consistently buys back shares to increase shareholders’ returns. The company has reduced 31% of its initial outstanding shares through repurchases. In the first quarter, Phillips 66’s cash outflows for dividends and share repurchases were $364 million and $344 million, respectively.
Phillips 66 trades at a current forward PE ratio of 6.7x, which is above the peer average of 5.4x. HollyFrontier and Delek US Holdings trade below the average at forward PE ratios of 5.2x and 4.8x, respectively.
Phillips 66’s high valuations are due to its strong financials and earnings model. The company has a favorable debt position. Phillips 66 has an integrated and diversified downstream earnings model. The company generates earnings from its refining, midstream, chemicals, and marketing segments. Phillips 66 plans to grow these segments through capex and acquisitions. For more on Phillips 66’s growth, read Phillips 66 Focuses on Midstream Expansion and Refining Upgrades.
Phillips 66 looks well-placed with a high dividend yield, strong financials, a sound business model, and favorable growth prospects.