Valero Energy Corp (VLO)

[Timothy Smith]

The company had $5.8 billion in cash and short-term investments at the end of 2Q15, up from $3.5 billion at the end of 2Q14. Total debt was $7.3 billion, and net debt was 20% of total capital.

As such, the company has sufficient resources to invest in growth projects and to return substantial capital to its shareholders by stock buyback and increasing dividend payments.

Joe Gorder, Valero's Chairman, emphasized in the latest quarter report that the company continues to focus on its key priorities of optimizing its operations, generating strong results, and returning cash to stockholders.

In fact, Valero increased its targeted total payout ratio to approximately 75% of 2015 net income from the previous target of 50%. According to its latest price, the forward annual dividend yield is at 2.48% and the payout ratio only 15.4%.

The annual rate of dividend growth over the past three years was very high at 51.8%, over the past five years was at 11.8%, and over the past 10 years was very high at 21.9%.