Is It Time to Buy Phillips 66 Stock?

PSX Total Return Price Chart

Since being spun off of ConocoPhillips in 2012, Phillips 66 stock has crushed the market:

PSX Total Return Price data by YCharts

There are probably two questions investors are asking today: First, is the stock due for a pullback? Second, what are the long-term prospects for the business? Let's take a closer look at the business behind the stock, and see what the future could hold.

What is Phillips 66's business today?

Source: Phillips 66

As you can see from this recent presentation, the company is dedicated to returning significant cash back to investors, both by increasing the dividend more than 10% annually, and by repurchasing shares. By committing to returning significant cash flows to shareholders, this will not only put money in your pocket, but it will also make it less likely that management uses that capital in less than ideal ways, like acquisitions or other means to grow that might not pan out.

Final thoughts: not cheap, but a solid long-term investment

Since splitting off from ConocoPhillips 30 months ago, the company has already repurchased 10% of shares outstanding and increased the dividend 150%, so it's pretty clear that management is making good on its commitment to return cash to shareholders. Add in the macro tailwinds, and it looks really good for long-term-minded investors.

Could the stock fall some in the short term? Sure. It's not exactly cheap today, and there's always the risk of an unforeseeable event that will spook the market. But since we can't predict that with any accuracy, keeping an eye on the long-term outlook for the business is a better way to more reliably measure opportunity. With a dividend yielding 2.2% today, and a commitment from management to grow it 10% annually for the foreseeable future, Phillips 66 looks like a great business, and a reasonably valued stock today.

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The article Is It Time to Buy Phillips 66 Stock? originally appeared on

Jason Hall has no position in any stocks mentioned. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days . We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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