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Valero Energy Corp's Dividend Analysis

Insight into the Upcoming Dividend Payment and Financial Health of Valero Energy Corp

Valero Energy Corp (NYSE:VLO) recently announced a dividend of $1.07 per share, payable on 2024-06-28, with the ex-dividend date set for 2024-05-30. 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?

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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 a year and holds a 50% stake in Diamond Green Diesel, which has capacity to produce 1.2 billion gallons per year of renewable diesel.

Valero Energy Corp's Dividend Analysis
Valero Energy Corp's Dividend Analysis

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 14 years.

Below is a chart showing annual Dividends Per Share for tracking historical trends.

Valero Energy Corp's Dividend Analysis
Valero Energy Corp's Dividend Analysis

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 2.53% and a 12-month forward dividend yield of 2.61%. 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 1.30%. Extended to a five-year horizon, this rate increased to 4.30% per year. And over the past decade, Valero Energy Corp's annual dividends per share growth rate stands at an impressive 16.60%.

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 3.12%.

Valero Energy Corp's Dividend Analysis
Valero Energy Corp's Dividend Analysis

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 2024-03-31, Valero Energy Corp's dividend payout ratio is 0.20.

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 2024-03-31, 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 37.00% per year on average, a rate that outperforms approximately 82.46% of global competitors.

Conclusion: Valero Energy Corp's Dividend Prospects

Considering Valero Energy Corp's consistent dividend growth, favorable payout ratio, and strong profitability and growth metrics, the outlook for its dividend sustainability appears positive. Investors seeking stable dividend income might find Valero Energy Corp an attractive option. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

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.

This article first appeared on GuruFocus.