Yahoo Finance Phillips 66's Dividend Analysis
Exploring the Sustainability and Growth of Phillips 66's Dividend Payments
Phillips 66 (NYSE:PSX) recently announced a dividend of $1.15 per share, payable on June 3, 2024, with the ex-dividend date set for May 17, 2024. 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 delve 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 1.8 million barrels per day (mmb/d). In 2023, the Rodeo, California, facility ceased operations and was 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, distributing dividends on a quarterly basis. The company has increased its dividend each year since 2012, earning it the status of a dividend achiever. This accolade is reserved for companies that have increased their dividends annually for at least the past 12 years. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down Phillips 66's Dividend Yield and Growth
As of today, Phillips 66 has a 12-month trailing dividend yield of 2.88% and a forward dividend yield of 3.15%, indicating an expected increase in dividend payments over the next 12 months. Over the past three years, Phillips 66's annual dividend growth rate was 5.30%, which remained consistent over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at an impressive 10.60%.
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 3.73%.
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. As of March 31, 2024, Phillips 66's dividend payout ratio is 0.32, indicating that the company retains a significant part of its earnings for future growth and unexpected downturns. Phillips 66's profitability rank, at 7 out of 10, suggests good profitability prospects, having reported net profit in 9 out of the past 10 years.
Growth Metrics: The Future Outlook
For the sustainability of dividends, robust growth metrics are vital. Phillips 66's growth rank of 7 out of 10 suggests a good growth trajectory relative to its competitors. The company's revenue per share, combined with a 3-year revenue growth rate of approximately 30.60% per year, outperforms about 74.68% of global competitors, indicating a strong revenue model.
Conclusion: Evaluating Phillips 66's Dividend Strategy
Phillips 66's consistent dividend growth, coupled with a solid payout ratio and robust profitability, paints a promising picture for current and potential investors. The company's strategic focus on maintaining and growing dividends is supported by its operational strengths and financial discipline. As Phillips 66 continues to adapt and expand, particularly in renewable energy, the prospects for sustained dividend growth appear optimistic. For those interested in further exploring high-dividend yield stocks, GuruFocus Premium users can utilize 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.
