July 31, 2025 a 02:46 am
PSX: Dividend Analysis - Phillips 66
Phillips 66, operating in the energy sector, offers a notable investment opportunity due to its consistent dividend history. Despite a high EPS payout ratio, the company maintains a stable financial outlook with a dividend yield of approximately 3.78%. With recent years showing a moderate dividend growth rate, investors can look forward to steady income generation amid economic fluctuations.
📊 Overview
Phillips 66 has established itself as a reliable dividend-paying company with a 14-year history of consistent payouts. Currently, the dividend yield stands at 3.78%, providing an attractive return relative to potential risks. The sector's inherent volatility necessitates astute management, but Phillips 66's commitment to rewarding shareholders remains steadfast.
| Attribute | Details |
|---|---|
| Sector | Energy |
| Dividend yield | 3.78% |
| Current dividend per share | 4.48 USD |
| Dividend history | 14 years |
| Last cut or suspension | None |
📈 Dividend History
The dividend history of Phillips 66 underscores its commitment to shareholder returns. Sustained dividend payments over 14 years reflect its strategic financial management. Dividend consistency signals corporate strength and reliability, which are critical factors for investors prioritizing stable income.
| Year | Dividend Per Share |
|---|---|
| 2025 | 3.55 USD |
| 2024 | 4.50 USD |
| 2023 | 4.20 USD |
| 2022 | 3.83 USD |
| 2021 | 3.56 USD |
📊 Dividend Growth
Analyzing the dividend growth of Phillips 66 over the last three and five years reveals a pattern of gradual increase. This sustained growth trajectory indicates management's focus on long-term capital appreciation and consistent shareholder value enhancement.
| Time | Growth |
|---|---|
| 3 years | 8.12% |
| 5 years | 5.15% |
The average dividend growth is 5.15% over 5 years. This shows moderate but steady dividend growth.
📊 Payout Ratio
Understanding payout ratios offers insight into a company's ability to sustain dividends. Phillips 66 currently has an EPS-based payout ratio of nearly 98.75%, which, while elevated, is complemented by a more conservative free cash flow payout ratio of 61.15%. These figures suggest that while earnings cover dividends, careful monitoring is advised.
| Key figure | Ratio |
|---|---|
| EPS-based | 98.75% |
| Free cash flow-based | 61.15% |
The 98.75% payout ratio based on EPS indicates a high level of earnings being paid out as dividends, potentially limiting reinvestment. However, the 61.15% FCF payout shows healthier coverage from operating cash flows.
📊 Cashflow & Capital Efficiency
Considering cash flow metrics is essential for evaluating financial flexibility and efficiency in capital utilization. Phillips 66 demonstrates a solid free cash flow yield at 5.89% and an earnings yield of 3.65%, indicating robust profitability. Efficient capital deployment ensures sustainability and growth potential.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 4.87% | 7.69% | 17.56% |
| Earnings Yield | 4.42% | 11.69% | 22.46% |
| CAPEX to Operating Cash Flow | 44.36% | 34.40% | 20.29% |
| Stock-based Compensation to Revenue | 0% | 0% | 0.12% |
| Free Cash Flow / Operating Cash Flow Ratio | 55.64% | 65.60% | 79.71% |
The cashflow stability and capital efficiency metrics indicate Phillips 66 is maintaining solid cash generation relative to its capital needs, suggesting sound financial management and the ability to support dividend payouts.
📊 Balance Sheet & Leverage Analysis
A thorough examination of the balance sheet reveals Phillips 66's leverage position and liquidity. Maintaining favorable debt-to-capital metrics and a solid interest coverage ratio indicates financial resilience.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.73 | 0.63 | 0.62 |
| Debt-to-Assets | 0.28 | 0.26 | 0.24 |
| Debt-to-Capital | 0.42 | 0.39 | 0.38 |
| Net Debt to EBITDA | 3.06 | 1.30 | 0.71 |
| Current Ratio | 1.19 | 1.26 | 1.38 |
| Quick Ratio | 0.92 | 1.02 | 1.17 |
| Financial Leverage | 2.65 | 2.47 | 2.59 |
Despite a comfortable leverage position, Phillips 66's strategic balance sheet management fosters financial stability and operational flexibility.
📊 Fundamental Strength & Profitability
Phillips 66's fundamentals showcase its profitability and operational efficiency. With improving return on equity and solid margins, the foundation for long-term growth remains robust.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 7.72% | 22.90% | 37.38% |
| Return on Assets | 2.92% | 9.28% | 14.42% |
| Margins: Net | 1.48% | 4.75% | 6.49% |
| EBIT | 2.53% | 7.05% | 8.98% |
| EBITDA | 4.18% | 8.39% | 9.95% |
| Gross | 7.56% | 7.57% | 10.84% |
| Research & Development to Revenue | 0% | 0.02% | 0.02% |
The impressive profitability metrics and margin expansion indicate a strong operational model capable of delivering sustained growth.
📉 Price Development
✅ Dividend Scoring System
| Category | Score | Score Bar |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 4 | |
| Dividend growth | 3 | |
| Payout ratio | 3 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 4 |
Overall Score: 30/40
🗣️ Rating
Phillips 66 exemplifies a stable and reliable dividend-paying stock, suitable for income-focused investors seeking balance between yield and growth. Given its comprehensive financial position and commitment to dividend continuity, it presents a compelling investment opportunity in the energy sector.