Phillips 66 is our stock of the month based upon its attractive 3.26% dividend yield, low beta, strong credit rating, and the fact that it is diversifying into the more lucrative chemical and midstream areas.
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Each month I feature a stock I feel has extraordinary potential as a dividend stock investment. Last month I featured energy company Occidental (NYSE:OXY). The month before that was Pfizer (NYSE:PFE). Phillips 66 is my top selection for new investments in February. The stock has fallen from over $87 a share to $78 as the energy sector has been out-of-favor since the beginning of the year.
Phillips 66 (NYSE:PSX) is a large-cap energy firm with a total of 13 refineries. Its current capacity is over 2 million barrels per day. It operates in four unique segments including refining, chemicals, midstream, and also a smaller marketing division. It also is well diversified, holding through joint ventures 12 NGL plants and over 60 natural gas processing facilities. The refining giant is located in Houston, Texas and was founded in 1875.
My positive investment thesis for Phillips 66 is based upon six key criteria, which include:
Key Selection Criteria
1. Large market capitalization.
2. A leadership position within an industry.
3. A strong balance sheet & solid cash flow.
4. A dividend above that of the S&P 500.
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