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HollyFrontier (HFC) to Construct RDU, OK's 6% Dividend Hike

Zacks Equity Research

HollyFrontier Corporation HFC has been executing its strategies well to boost business growth and maximize returns to its shareholders. To this end, it announced that it will build a renewable diesel unit (RDU) at its Artesia refinery in New Mexico.

In line with this plan, the company intends to increase its shareholders’ funds by raising its regular dividend. Further, the company initiated a new $1-billion stock repurchase program, substituting all the existing share buyback authorizations of which nearly $281 million was remaining.

For meeting the buoyancy in demand for low carbon-fuels, the company aims to construct an RDU, which together with rail infrastructure and storage tanks, is projected to incur a $350-million capital expense. The construction of the RDU with production capacity of 125 million gallons per year will be backed by cash in hand and is estimated to be complete by early 2022. The unit, apart from aiding HollyFrontier to increase the supply of low-carbon fuels, will also cover the expenses associated with the company’s annual RIN purchase obligation.

HollyFrontier Corporation Price

HollyFrontier Corporation Price

HollyFrontier Corporation price | HollyFrontier Corporation Quote

This Texas-based refiner also approved a 6% hike in its regular quarterly dividend to 35 cents per share, which is likely to be paid out on Dec 11, 2019 to its stockholders of record as of Nov 27. In the coming years, HollyFrontier targets to raise its dividend by 5% annually.

Of late, management named former Chairman Michael Jennings as its new president and CEO. George Damiris, who will retire by this year-end, will hand over his duties officially to the newly-appointed CEO on Jan 1, 2020.

Zacks Rank & Key Picks

HollyFrontier currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the energy space include Phillips 66 PSX, Delek Logistics Partners, L.P. DKL and PBF Logistics LP PBFX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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