To be honest, I wasn't sure how I felt about PSX and considered selling it as its price increased 50% since May. This recent increase and statement by their CEO has made me a believer in PSX's dividend growth future.
“This 25 percent increase reinforces our objective to provide competitive and growing dividends,” Phillips 66 Chairman and CEO Greg Garland said in a company statement. “Allocating capital to dividends and repurchases while continuing to invest in the growth of our business is fundamental to our philosophy of delivering shareholder value.”
PSX has a low payout ratio and low debt to total capital since their split from COP. This means that the company will be able to grow its dividend in the future without needing much internal growth from its business. The CEO appears to be focused on rewarding the shareholders, and as long as they execute I will be one of those shareholders.
With the recent dividend increase, the yield has climbed to just above 2%. This may not be appealing to dividend income seekers, but younger investors looking for dividend growth may want to take a closer look. Since PSX has only been trading since April, I am unable to do a full analysis. Once they have reported a full Fiscal Year I will be able to break the numbers down more.
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