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Important news for shareholders and potential investors in Valero Energy Corporation (NYSE:VLO): The dividend payment of $0.8 per share will be distributed into shareholder on 05 June 2018, and the stock will begin trading ex-dividend at an earlier date, 16 May 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Valero Energy’s most recent financial data to examine its dividend characteristics in more detail. See our latest analysis for Valero Energy
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is their annual yield among the top 25% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has dividend per share amount increased over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will the company be able to keep paying dividend based on the future earnings growth?
How well does Valero Energy fit our criteria?
Valero Energy has a trailing twelve-month payout ratio of 30.05%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 38.36%, leading to a dividend yield of 3.04%. However, EPS is forecasted to fall to $7.42 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. In terms of its peers, Valero Energy has a yield of 2.83%, which is on the low-side for Oil and Gas stocks.
Next Steps:
Considering the dividend attributes we analyzed above, Valero Energy is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three important factors you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for VLO’s future growth? Take a look at our free research report of analyst consensus for VLO’s outlook.
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Valuation: What is VLO worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether VLO is currently mispriced by the market.
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Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.