In This Article:
Assessing the Sustainability of Phillips 66's Upcoming Dividend Payment
Phillips 66 (NYSE:PSX) recently announced a dividend of $1.05 per share, payable on 2023-12-01, with the ex-dividend date set for 2023-11-16. 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 11 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 3.62% and a 12-month forward dividend yield of 3.68%. This suggests an expectation of increased 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 4.96%.
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 2023-09-30, Phillips 66's dividend payout ratio is 0.25.