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

This under-the-radar stock is forecast to pay a large yield.

| More on:
Woman refuelling the gas tank at fuel pump, symbolising the Ampol share price.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.  

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.

More on Dividend Investing

A woman in hammock with headphones on enjoying life which symbolises passive income.
Dividend Investing

Invest $20,000 in ANZ shares and get $1,200 in passive income

Can investors rely on ANZ for a 6% yield in their cash?

Read more »

Senior man wearing glasses and a leather jacket works on his laptop in a cafe.
Dividend Investing

Why your retirement income may take a hit — and what to do about it

Lower dividend payments doesn’t need to mean disaster.

Read more »

Australian dollar notes inside the pocket on jeans, symbolising dividends.
Dividend Investing

3 ASX dividend shares to buy with 5% to 7% yields

Analysts expect big yields from these buy-rated shares.

Read more »

Two excited woman pointing out a bargain opportunity on a laptop.
Dividend Investing

With 8%+ dividends, how long can these ASX 200 passive income shares stay cheap?

I think ASX 200 investors looking for ‘cheap’ passive income shares will want to check these out.

Read more »

A smiling woman puts fuel into her car at a petrol pump.
Dividend Investing

Where I'd invest $5,000 in ASX shares now for $1,000 of dividend income

The ASX offers a rich hunting ground for dividend income.

Read more »

a woman holds a facebook like thumbs up sign high above her head. She has a very happy smile on her face.
Dividend Investing

Bell Potter names the best ASX 300 dividend shares to buy

The broker has good things to say about these shares.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

Buy these ASX dividend stocks for passive income

Analysts expect attractive dividend yields from these shares.

Read more »

A male sharemarket analyst sits at his desk looking intently at his laptop with two other monitors next to him showing stock price movements
Dividend Investing

Goldman Sachs names 3 super-strong ASX 200 dividend shares to buy

The broker is feeling bullish about these blue chip options.

Read more »