Since gaining its independence in 2012, refining giant Phillips 66 (NYSE: PSX) has significantly outperformed the S&P 500, delivering a better-than-225% total return versus the approximately 100% gain of the index. One of the drivers of that outperformance is that the company has returned $12 billion in cash to investors via dividends and share repurchases. More cash is on the way because the company is putting the finishing touches on a major expansion program. As a result, Phillips 66 looks like it can continue outperforming the S&P over the long term, which makes the stock a solid buy for those seeking a lower-risk way to invest in the energy sector.
One of Phillips 66's focuses over the past few years has been investing capital to take greater advantage of the surge in cheap oil and gas from shale plays. While this has included spending money to increase its ability to refine domestic oil, Phillips 66 allocated the bulk of this capital on building new midstream and chemicals projects that will grow and diversify its revenue streams. One of the largest was a $6 billion petrochemical complex along the Gulf Coast that it built within its chemicals joint venture with Chevron (NYSE: CVX) to turn natural gas into the building blocks for plastics. While Hurricane Harvey will delay the start-up of the project until early next year due to flooding, once complete, Phillips 66 and Chevron should start receiving cash distributions from the joint venture.
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Source: Fool.com