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Refiners’ Dividend Yields Rise, Stocks Fall

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Refining stocks’ dividend yields

So far, refining stocks have fallen in the second quarter. The fall has raised the stocks’ dividend yields. We’ll discuss the stocks with better dividend yields. We’ll rank six American refining stocks based on their dividend yields.

PBF Energy (PBF) occupies the top spot. Valero Energy (VLO), Marathon Petroleum (MPC), and Phillips 66 (PSX) are next on the list. These four stocks have dividend yields above 4.0%. Delek US Holdings (DK) has the lowest dividend yield. All of the above stocks have increased their dividend payments in the past year, except for PBF Energy and HollyFrontier (HFC).

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Which stock looks good?

Refining stocks’ valuations have fallen sharply due to the fall in their stock prices. For these stocks, the average forward PE ratio is at 5.4x. However, Marathon Petroleum (MPC) and Phillips 66 (PSX) trade above the average forward PE ratio, while the remaining stocks trade below the average.

Usually, investors look out for financially sound undervalued stocks with a high dividend yield. Delek US Holdings and HollyFrontier trade below the peer average. However, they have weaker dividend yields.

Among the top three stocks, Valero Energy seems attractively placed with the second-best dividend yield and a lower PE ratio of 5.3x. The company has stronger financials like lower debt and favorable liquidity. Phillips 66 has below-average debt on its balance sheet and a dividend yield above 4%. HollyFrontier has favorable debt and a lower valuation. However, the company has the second-lowest dividend yield.

PBF Energy has the highest dividend yield and a forward PE ratio of 4.5x. The company has a higher debt in its capital structure compared to its peers. Marathon Petroleum (MPC) has high debt on its balance sheet. Marathon Petroleum has a high dividend yield and a premium valuation.

Delek US Holdings looks dull. The company has the lowest dividend yield, high debt in its capital structure, and a weaker earnings outlook.

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