Oil refiner and marketer Western Refining Inc. (WNR) hiked its fourth-quarter 2013 dividend to 22 cents per share (88 cents per share annualized), representing an increase of 22.2% from its third-quarter 2013 dividend of 18 cents. The new dividend is payable on Nov 14, 2013, to shareholders of record as of Oct 30, 2013.
Based on the closing price of $31.94 as of Oct 15, 2013, the dividend hike affirms a yield of 2.8%. We believe that the dividend hike – together with the ongoing share buyback plan of the company – not only highlights Western Refining’s commitment to create value for shareholders but also underlines its healthy financial condition.
Western Refining plans to release its third-quarter results on Oct 31, before the opening bell. The Zacks Consensus Estimate for Western Refining’s third quarter is 63 cents per share.
Texas-headquartered Western Refining is an independent refiner and marketer of refined petroleum products in the Southwestern and Mid-Atlantic regions of the U.S. The company operates in three segments: Refining, Wholesale and Retail.
Western Refining currently holds a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.
We expect Western Refining’s margins to be negatively impacted due to a rise in the cost of oil it buys to make gas, jet fuel and other refined products. The commodity’s price is hovering around $102 per barrel.
While we expect Western Refining to perform below its peers and industry level in the coming months, one can consider Kinder Morgan Inc. (KMI), Dril-Quip Inc. (DRQ) and Matador Resources Company (MTDR) that offer better prospects. All the stocks sport a Zacks Rank #1 (Strong Buy).