Any time a company which is known for its yield sees a significant drop in said yield due to a sharp run up in the company's underlying stock price, investors who are considering piling into such a company may wait on the sidelines for a pull-back, hoping for a dip to buy such a firm and attain a yield closer to historical averages.
In the case of Phillips 66 (NYSE:PSX), investors have seen a similar situation happen of late with the company's share price now trading near 52-week highs.
With a current yield of 3.3% (falling from a yield closer to 3.7% just a few months ago), PSX shares continue to be attractive for income investors interested in gaining exposure to a well-diversified refining company, although the current yield has become somewhat of a speed bump for some potential investors of late.
What many will be looking closely at over the coming quarters is if, and by how much, Phillips 66 management decides to raise its dividend to correspond with earnings which are expected to increase over this time period. A dividend increase would be in line with management's continued focus on returning value to shareholders, and will likely be expected by the market.
While the current yield of 3.3% may not appear to be very attractive on the surface, it should be noted that the company's average five-year yield has hovered around 2.2%, making now an excellent time to get into PSX and ride the wave higher, adding on any dips.
Invest wisely, my friends.
