ExxonMobil Is a Rock-Solid Dividend Stock, but So Is This Dirt Cheap Value Stock That Paid $1.8 Billion in Dividends Over the Past Year

Core Viewpoint - Phillips 66 is positioned as a reliable dividend stock, especially for investors looking to diversify their oil and gas holdings, with a strong focus on returning capital to shareholders and making strategic investments in renewable energy [1][4][6] Group 1: Financial Performance and Strategy - Phillips 66 experienced a significant loss of $4 billion in 2020 due to the COVID-19 pandemic, prompting a reevaluation of its business strategy [2] - The company aims to achieve $1.4 billion in run-rate cost savings by the end of 2024 and targets mid-cycle adjusted EBITDA of $14 billion by 2025, returning over 50% of operating cash flow to shareholders [2] - The company has committed to returning $13 billion to $15 billion to shareholders between July 2022 and year-end 2024 through dividends and buybacks [4] Group 2: Dividend and Shareholder Returns - Since its spin-off in 2012, Phillips 66 has raised its dividend at a compound annual rate of 16%, with a recent increase of 10% in the quarterly dividend to $1.15 per share, resulting in an annual payout of $4.60 per share and a forward yield of 3.3% [4][5] - The annual dividend expense is approximately $1.8 billion, and the company has spent $4.2 billion on buybacks over the last 12 months, indicating a strong commitment to shareholder returns [5] Group 3: Investment in Growth and Transition - Phillips 66 is investing in transforming its San Francisco Refinery into a biofuel facility, aiming for production of over 50,000 barrels per day, with current production at 30,000 bpd [3] - The company is focused on maintaining low capital expenditures and operating expenses while making strategic investments to grow earnings and meet the energy transition needs [3][6] Group 4: Market Position and Valuation - Phillips 66 shares are currently down 19% from their all-time high, presenting a potential buying opportunity, with a price-to-earnings ratio of 10.8, aligning with its historical average [6] - The company is recognized as an industry leader with the resources to invest in new projects, particularly in the biofuels sector, enhancing its attractiveness as a dividend stock [6]