Assessing the Sustainability and Growth of Valero Energy Corp's Dividends
Valero Energy Corp (VLO, Financial) recently announced a dividend of $1.02 per share, payable on 2023-12-20, with the ex-dividend date set for 2023-11-16. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Valero Energy Corp's dividend performance and assess its sustainability.
What Does Valero Energy Corp Do?
Valero Energy is one of the largest independent refiners in the United States. It operates 15 refineries with a total throughput capacity of 3.2 million barrels a day in the United States, Canada, and the United Kingdom. Valero also owns 12 ethanol plants with a capacity of 1.6 billion gallons of ethanol a year and holds a 50% stake in Diamond Green Diesel, which has the capacity to produce 1.2 billion gallons per year of renewable diesel.
A Glimpse at Valero Energy Corp's Dividend History
Valero Energy Corp has maintained a consistent dividend payment record since 1997. Dividends are currently distributed on a quarterly basis. Valero Energy Corp has increased its dividend each year since 2010. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 13 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Valero Energy Corp's Dividend Yield and Growth
As of today, Valero Energy Corp currently has a 12-month trailing dividend yield of 3.25% and a 12-month forward dividend yield of 3.28%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Valero Energy Corp's annual dividend growth rate was 2.90%. Extended to a five-year horizon, this rate increased to 7.00% per year. And over the past decade, Valero Energy Corp's annual dividends per share growth rate stands at an impressive 20.90%.
Based on Valero Energy Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Valero Energy Corp stock as of today is approximately 4.56%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Valero Energy Corp's dividend payout ratio is 0.14.
Valero Energy Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Valero Energy Corp's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Valero Energy Corp's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Valero Energy Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Valero Energy Corp's revenue has increased by approximately 19.40% per year on average, a rate that outperforms approximately 68.43% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Valero Energy Corp's earnings increased by approximately 70.90% per year on average, a rate that outperforms approximately 85.14% of global competitors.
Concluding Thoughts on Valero Energy Corp's Dividends
Valero Energy Corp's commitment to growing dividends, demonstrated by its status as a dividend achiever, is supported by a modest payout ratio and strong profitability. With impressive growth metrics in revenue and earnings, the company appears well-positioned to continue rewarding shareholders with sustainable dividends. Investors considering Valero Energy Corp for its dividend prospects should find reassurance in these financial indicators. As always, it is essential to monitor the company's financial health and market conditions to ensure that the dividend payments remain a reliable source of income.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
