Phillips 66 (PSX) shares nudged up 1.8% to close at $59.18 per share on Wednesday as investors cheered another round of dividend rate hike by the oil refiner. The company increased its quarterly common stock dividend by 25% to 39 cents per share. The new dividend will be paid on Dec 2, 2013 to shareholders of record as of Nov 14. The company paid a dividend of 31.25 cents in the previous quarter.
The strength of Phillips 66’s business model reflects its commitment to return value to shareholders along with its strong cash generation capabilities.
Phillips 66 has a good capital deployment policy through share repurchase and payment of dividends. During the second quarter of 2013, the company returned more than $738 million to shareholders through $192 million in dividend payments and $546 million in share repurchases. Through the end of June, the company had repurchased 22.6 million shares of common stock totaling $1.3 billion as part of its previously announced $2.0 billion share repurchase program. Phillips 66 had 611 million shares outstanding as of Jun 30, 2013.
We believe that the increase in dividend and share repurchase programs will boost investor confidence in the stock, and drive shareholder value.
Phillips 66, an independent publicly traded company, was formed after the spin-off of the refining/sales business of ConocoPhillips (COP) in May 2012. The move resulted in the creation of the largest refining company in the U.S. and the largest exploration and production player based on oil and gas reserves.
Phillips 66, is headquartered in Houston, Texas. In addition to the refining, marketing and transportation businesses, the company has emerged as an integrated downstream company with most of the Midstream and Chemicals segments, as well as power generation and certain technology operations included in the Emerging Businesses segment. Phillips 66 currently retains a Zacks Rank #3 (Hold).
In addition to Phillips 66, there are certain other energy operators like Matador Resources Company (MTDR) and Stone Energy Corp. (SGY) that offer value and are worth buying now. Both these firms sport a Zacks Rank #1 (Strong Buy).