A Dividend Marathon
02/14/2017 7:00 am EST
Marathon Petroleum Corporation (MPC) is an American petroleum refining, marketing, and transportation company headquartered in Findlay, Ohio, explains dividend reinvestment expert Vita Nelson, editor of DirectInvesting.
Its Refining & Marketing segment refines crude oil and other feedstocks, purchases ethanol and refined products for resale, and distributes refined products.
It sells refined products to wholesale customers domestically and internationally, buyers on the spot market, its Speedway business segment, and to independent entrepreneurs operating Marathon retail outlets.
Its current total market capitalization of $25.5 billion makes MPC a large cap stock. The firm enjoys a solid corporate culture and was elected the best employer of the United States in 2016 by Forbes magazine.
According to Yahoo! Finance, consensus estimates call for the company to earn about $1.96 per share for the current fiscal year, and to go to $3.35 next year.
Marathon Petroleum has paid dividends since 2011. It has increased its dividends in each of the past 5 years, at an average annual rate of 39.2%. Its current quarterly dividend of $0.36 provides a yield of 2.81%.
The stock exhibits a healthy Dividend Payout Ratio (DPR) of 37%, which means the company is retaining a large percentage of earnings to reinvest or grow the business. Its average DPR during the past 5 years is just 34%.
Its p/e ratio of 22.9 is 9.8% below its industry average, and according to Morningstar, the stock is trading 20.8% below its Fair Value Estimate, making it attractive for investors with a long-term investment horizon.
The company direct investment plan (DRIP) does not charge fees for optional cash investing, dividend reinvestment, safekeeping, automatic investment or termination of the plan.
With the stock being fundamental and technically attractive, this company is an appropriate holding for investors who have a long-term investment horizon.