On Dec. 3, I noted that HollyFrontier (HFC) was my "dividend champ" of 2012, saying the company "has been aggressive in returning copious amounts of cash to shareholders, in both the regular and special dividends." Happily, often these champions are the gift that keeps on giving. If there is momentum in business results and earnings, companies are usually able to continue to generate cash for extended periods, driving exceptional total returns for patient shareholders.
HollyFrontier had a huge year in 2012, but rather than execute a reversal, the stock has kept soaring, up another 29%.
I will take the capital gains any day, and in this case they are coming on top of great dividend performance. On Feb. 20, Holly announced both a 50% increase in the regular dividend to $0.30 per share, and a special $0.50 dividend on top of that, both coming in March! The company is not shy to point out that "this is the fifth increase in the regular dividend since our merger in July of 2011, representing a total increase of 300%."
That is what I call dividend performance. The recent dividend history is very impressive. Take a look.
There is nothing magic in what HollyFrontier does. It is a petroleum refiner with five plants in the U.S., making gasoline and other petroleum products. As is often the case, the company is a poster child for how a company can achieve excellent returns with strong management, efficiency opportunities (via the merger) and a dose of tailwind within their industry. Clearly if crack spreads narrow, the cash flow and dividends will not be as strong as in the past -- but, for now, they are delivering, and I am letting this stock ride.