Yahoo Finance 3 Energy Stocks to Keep on Your Radar on Dividend Hikes
Investors generally favor companies that demonstrate a strong commitment to returning capital to shareholders. Beyond price appreciation, dividends and share buybacks offer additional satisfaction. This is particularly important in the energy sector, where companies that return value to shareholders inspire greater confidence among investors due to the sector's inherent volatility in oil and natural gas prices.
Major energy companies have released first-quarter 2024 results, with several announcing dividend increases. Investors should keep an eye on Energy Transfer LP ET, Kinder Morgan Inc. KMI and Phillips 66 PSX, as these energy players have raised their dividends/distributions and demonstrated a strong ability to continue returning value to shareholders/unitholders.
All the players currently have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3 Stocks That Hiked Dividend
As one of North America's leading energy infrastructure companies, Kinder Morgan maintains a stable business model with minimal exposure to commodity price fluctuations. The company generates most of its earnings through take-or-pay contracts, ensuring consistent cash flow and bottom-line stability, enabling it to reward shareholders with dividends.
Last month, along with the first-quarter 2024 earnings, Kinder Morgan declared authorizations from the board of directors to increase its dividend to 28.75 cents per share for the March quarter from the prior quarter’s 28.25 cents. The increased dividend was paid on May 15 to stockholders of record as of the close of business on Apr 30.
Phillips 66 has a diversified business model, with a significant presence in businesses related to refining midstream, chemicals and marketing & specialties. In each of its operations, Phillips 66 has a solid footprint pertaining to safety, profitability, size and competitive strengths.
The diversified business model will aid the company in fulfilling its commitment to returning capital to shareholders. Early last month, PSX announced authorization from the board of directors to increase its quarterly dividend to $1.15 per share from the prior amount of $1.05.
Notably, since July 2022, the company has returned a massive $9.9 billion through both dividends and share repurchases. By the end of this year, it expects to meet its target of returning $13 billion to $15 billion to shareholders.
Energy Transfer generates stable fee-based revenues from its huge network of midstream infrastructures, including a pipeline network spreading across more than 125,000 miles. The natural gas transportation and storage assets of the largest and most diversified midstream player have a lower vulnerability to fluctuations in commodity prices, suggesting a stable business model.
On Apr 24, the partnership announced cash distribution of 31.75 cents per unit for first-quarter 2024, reflecting an increase from 31.5 cents for the fourth quarter. The hiked distribution will be paid on May 20 to unitholders of record as of the close of business on May 13. Notably, the recent acquisition of Crestwood Equity Partners LP has further diversified its gathering and processing assets and reduced costs, likely boosting free cash flow and enabling higher distribution growth and unit buybacks.
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Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
Phillips 66 (PSX) : Free Stock Analysis Report
Energy Transfer LP (ET) : Free Stock Analysis Report
