Marathon Petroleum Offers Shareholders 54% One-Year Total Return (MPC)
By: Ned Piplovic,
Marathon Petroleum Corporation (NYSE:MPC), the nation’s second-largest petroleum refiner, has been paying rising dividends for nearly a decade and has provided steady share-price growth over the past two years, culminating in a combined total return of more than 54% in the past 12 months.
The company has provided its shareholders with a steadily rising dividend income and a relatively stable asset appreciation with just one major sell-off since 2011. Additionally, the company’s pending acquisition of Andeavor(NYSE: ANDV) should add an additional 3,100 gas station/convenience store locations to the company’s Marathon brand.
Investors convinced that the Marathon Petroleum Corporation will continue to reward its shareholders with outsized total returns should complete their due diligence quickly and act prior to the company’s next ex-dividend date on May 15, 2018, to ensure eligibility for the next round of dividend distributions on the June 11, 2018, pay date.
Marathon Petroleum Corporation (NYSE:MPC)
Headquartered in Findlay, Ohio and incorporated in 2009, the Marathon Petroleum Corporation engages in refining, marketing, retailing and transporting of petroleum products. The company operates six refineries in the Gulf Coast and Midwest regions to refine crude oil into gasoline, distillates, propane, heavy fuel oil and asphalt. As of December 31, 2017, the company owned and operated 18 asphalt terminals, 61 light products terminals and more than 10,000 miles of various product transportation and distribution pipelines. Additionally, the company sells its Marathon brand gasoline through approximately 5,600 independently owned retail outlets – excluding the 3,100 additional locations pending the Andeavor acquisition – across 20 states and the District of Columbia. The company’s Speedway LLC subsidiary owns and operates the nation’s second-largest convenience store chain, with approximately 2,740 convenience stores in 21 states.
The company’s current $0.46 quarterly dividend distribution is 15% higher than the $0.40 payout from the same period last year. This new quarterly dividend amount currently yields 2.4% and is equivalent to a $1.84 annualized dividend for 2018. However, the company’s dividend payment history since 2012 indicates that it should hike its quarterly dividend amount in the third quarter. Investors should expect that dividend declaration some time in late June, with a mid-August ex-dividend date and the pay date in early September.
The company’s sharp asset appreciation over the past 12 months suppressed the dividend yield to its current 2.4% from 3% one year ago, which is close to the company’s 3.1% average yield over the past five years. Even the reduced yield is still within 2% of the 2.44% simple average yield of all the companies in the Basic Materials market sector.
Since beginning its dividend distributions in 2011, the company advanced its total annual dividend amount more than 330% by boosting its annual dividend payouts at an average growth rate of 23.3% per year.
Over the past year, the company’s share price was the main driver of total returns. The share price carried its uptrend from early 2017 into the current trailing 12-month period through the beginning of August but then dropped to its 52-week low of $49.45 by August 21, 2017. This low was 3.7% below the May 9, 2017, price but the share price recovered that variance in just three days and was back to the Aug. 1 level by mid-October 2017. The share price continued to rise with just one drop during the early February market sell-off. By the time it reached its 52-week high of $83.93 on April 26, 2018, the share price had gained nearly 70% above the 52-week low from late August. Since peaking at the end of April, the share price declined 8.3% and closed on May 7, 2018, at $76.94, which was nearly 50% higher than it was 12 months earlier, 55.6% above the 52-week low in August 2017 and 86% higher than it was five years ago.
A share price drop of more than 45% between late November 2015 and mid-February 2016 deflated the company’s three-year total return to just 58%, which was just slightly higher than the company’s 54.4% total return over the past 12 months. Over the past five years, the shareholders doubled their investment with a 103.3% total return.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.