Phillips 66's Dividend Analysis
An In-Depth Look at Phillips 66's Upcoming Dividend and Its Sustainability
Phillips 66 (NYSE:PSX) recently announced a dividend of $1.05 per share, payable on 2024-03-01, with the ex-dividend date set for 2024-02-16. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Phillips 66's dividend performance and assess its sustainability.
What Does Phillips 66 Do?
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Phillips 66 is an independent refiner with 12 refineries that have a total crude throughput capacity of 1.9 million barrels per day, or mmb/d. In 2023, the Rodeo, California, facility will cease operations and be converted to produce renewable diesel. The midstream segment comprises extensive transportation and NGL processing assets and includes DCP Midstream, which holds 600 mbd of NGL fractionation and 22,000 miles of pipeline. Its CPChem chemical joint venture operates facilities in the United States and the Middle East and primarily produces olefins and polyolefins.
A Glimpse at Phillips 66's Dividend History
Phillips 66 has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a quarterly basis.
Phillips 66 has increased its dividend each year since 2012. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 12 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Phillips 66's Dividend Yield and Growth
As of today, Phillips 66 currently has a 12-month trailing dividend yield of 2.93% and a 12-month forward dividend yield of 2.93%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Phillips 66's annual dividend growth rate was 3.00%. Extended to a five-year horizon, this rate increased to 6.50% per year. And over the past decade, Phillips 66's annual dividends per share growth rate stands at an impressive 17.60%.
Based on Phillips 66's dividend yield and five-year growth rate, the 5-year yield on cost of Phillips 66 stock as of today is approximately 4.01%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Phillips 66's dividend payout ratio is 0.27.
Phillips 66's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Phillips 66's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Phillips 66's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Phillips 66's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Phillips 66's revenue has increased by approximately 14.90% per year on average, a rate that outperforms approximately 57.86% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Phillips 66's earnings increased by approximately 32.20% per year on average, a rate that outperforms approximately 62.97% of global competitors.
Engaging Conclusion
Phillips 66's consistent dividend payments, coupled with its robust dividend growth rate, payout ratio, profitability, and growth metrics, paint a promising picture for value investors. The company's financial health and commitment to shareholder returns make it an attractive candidate for those seeking stable income streams. With a solid track record and a forward-looking approach, Phillips 66 appears well-positioned to continue its dividend legacy. As investors consider adding PSX to their portfolios, they may ponder on the company's potential to maintain and grow its dividends in the dynamic energy sector. What strategic moves will Phillips 66 make to sustain its dividend attractiveness in the years to come?
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
