Phillips exports nearly 100,000 barrels of refined gasoline and diesel. This amount is predicted to double by 2014 and continue to increase. Phillips isn’t the only player in town when it comes to this type of exporting, the entire amount of gasoline exported from this country is set to double by early 2015.
Phillips 66 has a low profit margin, but more than makes up for it in volume. It has a very conservative payout ratio of 12.3% and now sports a $0.31 quarterly dividend, up from $0.20 when it was first spun off last year. Phillips 66 is expecting to continue raising the dividend to approximately 35% of earnings over the next five years, so there will be plenty of room to grow. The dividend of 2.1% would be near 6% if the company was to implement that policy today.
is vertically integrated as an energy company. In addition to its oil operations, the company is also investing heavily in natural gas and alternative fuels to gain expertise and remain relevant in the future.
The company has started to diversify itself more into downstream and chemical divisions. Exxon Mobil Corporation (NYSE:XOM) earned $9.5 billion in 1Q’13. $7 billion came from its traditional upstream oil and natural gas assets, $1.5 billion from downstream assets, and $1.1 billion from its chemical segment. This past quarter, Exxon Mobil Corporation (NYSE:XOM) secured more acreage off of the coast of China in addition to closing the Celtic acquisition. The Celtic acquisition will bring in an additional 600 acres of natural gas liquid shale, and help diversify Exxon Mobil Corporation (NYSE:XOM)’s business further.
Exxon Mobil Corporation (NYSE:XOM) has a gross margin of 35% compared to its peers at 13.7%. Exxon Mobil Corporation (NYSE:XOM) uses 23.2% of its earnings to support a dividend of 2.7%. This company has a history of growing its dividend over time and has a shareholder-friendly management.
Schlumberger and Phillips 66 offer great exposure to a growing and a stable industry, both of which suit growth and income investors, respectively. However, Exxon provides the best of both worlds with the size and scale to take on larger projects.
Although Exxon might not provide stellar returns, the company offers stability and rewards for shareholders. Exxon has decreased its share count by over 10% since the beginning of 2011, and would probably continue to do so.
Wes Patoka has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Wes is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article 3 Picks From the Oil Industry originally appeared on Fool.com is written by Wes Patoka.
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