Phillips 66 Continues Raising Annual Distributions with Sixth Consecutive Hike (PSX)
By: Ned Piplovic,
Since being spun off from ConocoPhilips (NYSE: COP) in 2012, Phillips 66 (NYSE: PSX) has paid a rising annual dividend every year. 2018 marks the sixth consecutive year this has occurred, giving the company a perfect 100% track record in this regard.
Phillips 66 currently has two other elements that are working in its favor: strong quarterly earnings and impressive stock growth. In the second-quarter of 2018, PSX’s total adjusted net income came in at $1.4 billion, more than a 130% increase over the same period last year. Quarterly earnings rose from $233 million in 2017 to an adjusted profit of $911 million. The company’s Refining segment, driven by higher margins, contributed two-thirds of the second-quarter’s total adjusted income.
In addition, PSX shareholders saw a total return of nearly 50% over the past 12 months thanks to rising dividend income and substantial share price appreciation. Over the last five years, the stock price has more than doubled.
With the strong earnings beat recently, it should come as no surprise that technical indicators are not flashing a slowdown for this company anytime soon. Investors interested in strong yearly dividend increases, impressive share price growth and solid fundamentals may want to take a position prior to August 20, 2018, the company’s next ex-dividend date. Doing so will ensure eligibility to receive the next round of dividend distributions on September 4, 2018.
Phillips 66 (NYSE: PSX)
Headquartered in Houston, Texas and tracing its roots to 1875, Phillips 66 operates as a diversified energy manufacturing and logistics company. The company processes, transports, stores and markets fuels and products globally through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream business segment focuses on processing, transporting and marketing natural gas and natural gas liquids in the United States. As of June 2018, the Refining segment’s 13 refineries had the capacity to refine 2.2 million barrels of crude oil into various petroleum products, including gasolines, distillates and aviation fuels. The Chemicals segment manufactures and markets various specialty chemical products, including organosulfur chemicals, solvents, catalysts, drilling chemicals and mining chemicals. Lastly, the M&S segment markets refined petroleum products and manufactures and sells specialty products, such as waxes, solvents and polypropylene. The company’s origins go back to the foundation of Continental Oil and Transportation Company in 1875. However, Philips 66 began trading on the New York Stock Exchange as a standalone company in May 2012, following a separation of its assets from the ConocoPhillips company.
With a current payout of $0.80 per share every quarter, PSX’s forward annual distribution is about $3.20, or a 2.6% yield at current prices. This time last year, PSX paid out a $0.70 per share dividend for the quarter, which is 14.3% lower than the current amount. The 2.6% current yield is consistent with the company’s average yield over the past five years and outperforms the 2.33% simple average yield of the overall Basic Materials sector by more than 11%.
While the 2.6% yield isn’t terribly impressive, the rate of growth over the last few years has been. At the start of 2013, PSX paid a $0.3125 quarterly dividend, compared to a quarterly payout of $0.80 currently. That’s more than 150% growth in just a couple of years.
PSX reached a 52-week low of $80.89 just two weeks into the trailing 12-month period. Despite two minor pullbacks since, the share price ultimately advanced more than 52% before peaking at its 52-week high of $123.34 on July 31, 2018. Since then, shares declined marginally and closed on Aug. 8 at $122.98. This closing price was 45.6% higher than it was one year earlier and 52.5% above the 52-week low.
In addition to the significant total return of almost 50% over the past year, long-term shareholders have seen total returns of nearly 65% over the past three years and 132% over five years.
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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.