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Warren Buffett Buys Into Phillips 66: Here’s Why

Warren Buffett Buys Into Phillips 66: Here's Why by Sure Dividend

On August 11th, I wrote the following about Phillips 66 (PSX):

Phillips 66 has a solid dividend yield of 2.7% and expected earnings-per-share growth of 5%+. The company has a very shareholder friendly management as well.

Best of all, the company has a low price-to-earnings ratio of just 11.8. Phillips 66 combination of decent growth, above-average dividends, and low valuation gives it a high rank using The 8 Rules of Dividend Investing.

Phillips 66 is not a value trap. The company is an undervalued downstream oil and gas giant with a shareholder friendly management that will very likely reward shareholders with continued dividend growth and share repurchases.

Warren Buffett must agree.

Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) recently disclosed a $4.5 billion stake in Phillips 66.

The company bought shares of Phillips 66 for prices between $71.12 and $77.22 from August 26th to 28th. The average price paid was $74.66.

Phillips 66 traded for lows of around $60 a share back in January of 2015. The stock is currently trading at around $79 a share.

At current prices Phillips 66 is still a bargain.