Midcap Energy Stocks To Buy #2: HollyFrontier (HFC)
Refiners live and die by their margins. If crack spreads are too tight, profits are dwindled down to nothing. Luckily for midcap refiner HollyFrontier (HFC), it’s still enjoying pretty juicy margins on its refined products.
That’s because HFC’s five refineries are all located in the center of the United States, right smack in the middle of West Texas Intermediate crude country. And as we’ve seen, the WTI-Brent crack spread has been quite rich the last few years. That has helped Holly produce some pretty impressive profits.
And with the WTI-Brent spread recently getting wider, HFC should be able to keep churning out those revenues.
Holly should also keep churning out dividends as well.
Since launching in 2011, HFC has managed to return about $2.2 billion worth of cash back to shareholders via dividends and buybacks. The latest was special 50-cent dividend, in addition to upping its regular payout by 6.7%. HFC stock currently yields 2.6% and trades for a forward P/E of less than 10. As far as midcap energy stocks go, HFC is on its way to becoming a dividend champion.