Phillips 66 Stock Is Up 133%. Can Its Dividend Keep Growing?

Chris Lange

Mon, October 19, 2026 at 10:15 AM EDT 5 min read

Quick Read

PSX raised its quarterly dividend 4.7% to $1.33, backed by midstream’s ~$1B quarterly cash that reliably covers the payout even when refining margins cool.
VLO returned 59% of Q2 cash flow to shareholders, but PSX returned only 21%, deliberately prioritizing debt reduction toward a $16B target by 2026.
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Phillips 66 (NYSE:PSX) raised its quarterly dividend by $0.06 on Oct. 16, bringing the payout to $1.33 per share. The prior rate was $1.27. That’s a 4.7% raise, or $5.32 a year. At the latest price of $294.43, the forward yield comes to about 1.8%. The yield is thin because the stock is up 132.87% year to date. Income investors need to know whether the cash behind the payout holds up once refining margins cool.

An aerial, wide-angle shot of a large industrial refinery complex at dusk or dawn. Numerous tall, slender stacks, intricate networks of pipes, tanks, and industrial structures are brightly lit by yellow and white lights. In the background, rolling green mountains are visible. The sky transitions from a warm orange and yellow near the horizon on the right to a soft blue and purple overhead on the left. — tawatchaiprakobkit / Getty Images

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Refining Windfall Covers the Payout Many Times Over

In the second quarter, cash from operations excluding working capital hit $4,317 million, up from $699 million in Q1. Dividends of $508 million used only about 11.8% of that. Realized refining margins jumped to $24.08 per barrel from $10.11 in Q1. Adjusted EPS came in at $9.41, ahead of the $8.09 consensus.

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Q1 showed the downside. Cash ex working capital of $699 million was above the Q2 dividend bill, and $839 million in mark-to-market derivative losses weighed on the quarter. Management describes today’s tight market as a supply shock. Brian Mandell said he expects stronger margins “potentially through the rest of 2027,” but refining remains the volatile part of the business.

Midstream Carries the Dividend

On the Q2 call, management said the steadier businesses are what actually fund the payout:

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“Midstream, along with Marketing and Specialties, provides that consistent cash generation to cover the sustaining capital and the dividend and, today, a significant portion of our interest expense.”