PSX - Phillips 66: Despite A Dividend Hike Upside May Be Limited (Rating Downgrade)

2024-04-04 06:04:57 ET

Summary

• Phillips 66 increased its quarterly dividend by 10% to $1.15, reflecting strong cash generation and commitment to returning cash flow to investors.
• The company's diversified business model reduces cyclicality but may cap earnings growth in 2024, prompting my suggestion to take profits.
• PSX's refining sector should perform well due to wider profit margins, but other segments of the business may not see strong cash flow growth.

On Wednesday, April 3rd, Phillips 66 ( PSX ) announced a 10% increase to its quarterly dividend to $1.15, giving shares a 2.7% yield. This is consistent with the company's strong cash generation and focus on returning at least 50% of operating cash flow to investors via dividends and buybacks. This approach has rewarded shareholders with the stock up by about 2/3 over the past year to new all-time highs....

For further details see: