This ASX 200 energy stock is predicted to pay a dividend yield of almost 8%!

The S&P/ASX 200 Index (ASX: XJO) energy stock Ampol Ltd (ASX: ALD) is forecast to pay a significant dividend yield to shareholders this year.

Let’s take a closer look at the company and its recent performance.

What does Ampol do?

Ampol is one of the largest petroleum, or “transport energy”, providers in Australia. Previously known as Caltex Australia, the company supplies the country’s largest branded petrol and convenience network. It’s also involved in refining, important and marketing fuels and lubricants.

It has 16 terminals, six major pipelines, 55 ‘wet’ depots and more than 1,800 branded sites (including 690 company-operated retail sites). It has a refinery based in Lytton, Queensland.

The company also has a trading and shipping business that operates out of Singapore and Houston (USA). Ampol owns Z Energy, which sells approximately 40% of all fuel volumes across New Zealand. And it has a 20% interest in Seaoil, a fuel company in the Philippines.

The ASX 200 energy stock could pay a big dividend yield

Ampol is making a solid profit at the moment, enabling the ASX 200 energy stock to pay shareholders a decent dividend.

In its fourth-quarter update recently, the company advised it anticipated its earnings before interest and taxes on a replacement cost basis (RCOP EBIT) for 2023 to be “slightly ahead” of the record results delivered in 2022 — on a continuing basis.

Growth in earnings from non-refining divisions offset a reduction in refinery earnings from the historically high levels in the prior year.

The projection on Commsec suggests that the 2024 earnings per share (EPS) could be $2.86. This would imply the business is trading at 13x FY24’s estimated earnings. From that profit, it could pay an annual dividend per share of $2, translating into a grossed-up dividend yield of 8% if we round it to the nearest whole per cent.

But, keep in mind that the forecast also suggests a slight decline in the EPS in 2025. This could see a dividend of $1.89 per share, which would be a grossed-up dividend yield of 7.25%.

What about the growth of electric vehicles?

Of course, electric vehicles don’t need petrol, which could present a growing headwind for the company in the future.

Ampol recently launched its electric vehicle charging and home electricity solutions to ensure it delivers its customers’ “changing energy needs”.

It’s a good move to put charging stations at service stations, but I’d imagine most people will do most of their car charging at home (or work) rather than at a service station.

However, at this stage, electric vehicles still make up a small number of vehicles on the roads.

Ampol share price snapshot

The Ampol share price has surged 15% over the past six months.  

The post This ASX 200 energy stock is predicted to pay a dividend yield of almost 8%! appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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