Dividend stock investors grew complacent after weakness in energy markets in the first quarter. But that changed over the weekend after OPEC surprised market watchers, cutting crude oil output more than expected and sending energy prices soaring. Energy giant Phillips 66 (PSX) looks to benefit from this development as share prices strengthen, buoyed by another dividend hike in February.
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Phillips 66 manufactures and distributes petrochemicals through four segments: refining, midstream, chemicals and marketing.
This dividend stock was featured in January’s Income Investor as growth and the prospect of higher yields made this issue more attractive to the income crowd.
Since then, Phillips has predictably raised its dividend, which now stands at $1.05 per share. This marks the 13th consecutive year of dividend hikes.
The latest uptick brings the annualized yield to a hefty 4.10%, higher than January’s 3.7% and well above the 1.6% average yield of S&P 500.
Top Dividend Stock And 2022 Earnings Windfall
Earnings for this dividend stock soared last year in reaction to war-driven supply constraints and higher inflation. Earnings surged 318% year over year in 2022, rising from $5.70 to $18.79 per share.
Moving forward, earnings expectations have moderated but remain at elevated levels, well above the five years preceding 2022’s profit windfall. As a result, Phillips 66 has promised to return $10 billion-$12 billion to shareholders by the end of 2024, through higher dividends and share buybacks.
The producer is well positioned to deliver on this commitment as long as energy prices don’t crater.
Debt is firmly in investment grade, with a (BBB+) rating from S&P Global. In addition, January’s acquisition of DCP Midstream (DCP) should stabilize cash flows.
The surge in oil prices has lifted shares this top dividend stock above their 50-day line, continuing a recent growth spurt. Nevertheless, the stock remained rangebound, well below the all-time high of 113.53 hit in November. WTI crude oil futures traded in the 90s at that time.
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Source: https://www.investors.com/research/the-income-investor/dividend-stock-leader-a-dividend-hike-and-opec-cut-return-phillips-66-to-spotlight/?src=A00220&yptr=yahoo