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Valero's Crash Is A Blessing For Dividend Investors

Published Mon, 29 Jun 2020 12:07:18 -0400 on Seeking Alpha

Seeking AlphaDividend Ideas | Basic MaterialsValero's Crash Is A Blessing For Dividend InvestorsJun. 29, 2020 12:07 PM ET|| About: Valero Energy Corporation (VLO)by: Leo NelissenLeo Nelissen Medium-term horizon, dividend investing, dividend growth investingSummaryValero, one of the nation's biggest refinery stocks can currently be bought at a 40% YTD discount and a 7% yield.
While COVID-19 is an issue, the company remains committed to paying a dividend with a strong history of annual hikes.
Valero's balance sheet is strong, and while I expect volatility to remain high, I believe in a big rally in 2021 and beyond.
Did you ever look at a company's steady and high dividend payments to its investors and think 'I want some of that as well'? Well, I do. Valero (VLO) is one of the stocks that have tremendous shareholder commitment, which they embrace through maintaining a solid balance sheet, effective business operations, and a steady and high payout ratio. The bad news, or in this case the good news for new investors, is that the company has been hit severely by the current COVID-19 pandemic. The stock is down roughly 40% year-to-date, which is offering a tremendous buying opportunity. I took a look and will tell you why I am adding this one as soon as possible. Bear with me!

Source: Valero (Old & New Logo)
Cyclical And Profitable
Let's start this article by mentioning a few basic company characteristics. The founded in 1980 and San Antonio TX-based Valero Energy Corporation is an energy company focused on oil and gas refining and marketing. Valero has a $23.5 billion market cap and is an S&P 500 member. With a market cap $7 billion below Phillips 66 (PSX), the company is the second-largest operator in its industry, even though the distance to number three, Marathon Petroleum (MPC) is just $300 million.
Valero generates roughly 70% of its sales inside of the United States, followed by 12% in the United Kingdom (and Ireland), and... Read more