In This Article:
Assessing the Sustainability and Growth of Valero Energy Corp's Dividends
Valero Energy Corp (NYSE:VLO) recently announced a dividend of $1.02 per share, payable on 2023-12-20, 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 Valero Energy Corp's dividend performance and assess its sustainability.
What Does Valero Energy Corp Do?
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Valero Energy is one of the largest independent refiners in the United States. It operates 15 refineries with a total throughput capacity of 3.2 million barrels a day in the United States, Canada, and the United Kingdom. Valero also owns 12 ethanol plants with a capacity of 1.6 billion gallons of ethanol a year and holds a 50% stake in Diamond Green Diesel, which has the capacity to produce 1.2 billion gallons per year of renewable diesel.
A Glimpse at Valero Energy Corp's Dividend History
Valero Energy Corp has maintained a consistent dividend payment record since 1997. Dividends are currently distributed on a quarterly basis. Valero Energy Corp has increased its dividend each year since 2010. 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 13 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Valero Energy Corp's Dividend Yield and Growth
As of today, Valero Energy Corp currently has a 12-month trailing dividend yield of 3.25% and a 12-month forward dividend yield of 3.28%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Valero Energy Corp's annual dividend growth rate was 2.90%. Extended to a five-year horizon, this rate increased to 7.00% per year. And over the past decade, Valero Energy Corp's annual dividends per share growth rate stands at an impressive 20.90%.
Based on Valero Energy Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Valero Energy Corp stock as of today is approximately 4.56%.
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, Valero Energy Corp's dividend payout ratio is 0.14.