Is Murphy (MUSA) a Good Dividend Stock Choice Post Hike?
Murphy USA MUSA recently got approval from its board of directors to increase the quarterly dividend by a penny (or 2.6%) to 39 cents per share, which translates into $1.56 per share on an annualized basis. The new payout will be made on Sep 7 to its common shareholders of record on Aug 28.
MUSA continues to display strength across all major categories, thanks to volume and market share gains in tobacco, to go with sales and contribution growth in non-tobacco categories. This positive backdrop, together with Murphy USA’s low-cost model, strong balance sheet and healthy cash flows, allowed the Zacks Rank #3 (Hold) refining and marketing operator to reward investors with a dividend hike last week.
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While stock buyback continues to be MUSA’s preferred tool to distribute cash, the company’s policy dictates that it ploughs back around 4% of its capital in paying dividends. Agreed, the company’s current dividend yield is very low at less than 1%, but it is well protected with a payout ratio of just 6. As a result, the dividend not only looks quite sustainable but also leaves enough scope for future dividend increases. Investors should note that Murphy USA was one of the very few enterprises to actually initiate their first dividends during the coronavirus crisis of 2020 when countless others were being cut. (Check Murphy USA’s dividend history here)
Murphy USA is a leading independent retailer of motor fuel and convenience merchandise in the United States. The El Dorado, AR-based company, in its current form, came into existence following the 2013 spin-off of Murphy Oil Corporation’s downstream business into a separate, independent and publicly- traded entity. Murphy USA markets refined products through a chain of retail stations, almost all of which are located near a Walmart superstore, primarily in the Southeast, Southwest and Midwest United States.
3 Energy Dividend Payers That Offer Better Yields Than MUSA
If you think Murphy USA’s dividend yield is too modest, here are some better choices.
HF Sinclair Corporation DINO: A producer and marketer of gasoline, diesel fuel and other specialty products, HF Sinclair pays out a quarterly dividend of 45 cents ($1.80 annualized) per share that gives it a 3.12% yield at the current stock price. The company’s payout ratio is 15, with a five-year dividend growth rate of 6.63%. (Check HF Sinclair’s dividend history here)
DINO is valued at some $10.6 billion. The Zacks Consensus Estimate for HF Sinclair’s 2023 earnings has been revised 15.3% upward over the past 30 days. The downstream operator has a trailing four-quarter earnings surprise of roughly 10.4%, on average. DINO shares have gained 9.7% in a year.
ExxonMobil XOM: ExxonMobil is one of the largest publicly traded oil and gas companies in the world, which participates in every aspect related to energy — from oil production to refining and marketing. XOM’s dividend of 91 cents per share ($3.64 annualized) represents a 3.31% yield. ExxonMobil’s payout ratio is 29, with a five-year dividend growth rate of 1.75%. (Check ExxonMobil’s dividend history here)
ExxonMobil is valued at some $440.5 billion. XOM’s expected EPS growth rate for three to five years is currently 21.4%, which compares favorably with the industry's growth rate of 15.4%. ExxonMobil, headquartered in Irving, TX, has a trailing four-quarter earnings surprise of roughly 5.2%, on average. XOM shares have gained 17.1% in a year.
Valero Energy VLO: Among all the independent refiners, Valero offers the most diversified refinery base with a capacity of 3.1 million barrels per day in its 15 refineries located throughout the United States, Canada and the Caribbean. VLO pays out a quarterly dividend of $1.02 ($4.08 annualized) per share, which gives it a 3.05% yield at the current stock price. The company’s payout ratio is 14, with a five-year dividend growth rate of 3.94%. (Check Valero Energy’s dividend history here)
Valero is valued at some $47.2 billion. The Zacks Consensus Estimate for VLO’s 2023 earnings has been revised 9.8% upward over the past 30 days. The refining giant has a trailing four-quarter earnings surprise of roughly 9%, on average. VLO shares have gained 12.1% in a year.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Valero Energy Corporation (VLO) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
HF Sinclair Corporation (DINO) : Free Stock Analysis Report
