Covered, compounding. A 1.14% yield on a 10.98% payout is comfortably covered, and the rate keeps rising — $1.20 a quarter after the January 2026 raise from $1.13. The yield looks small only because the price has run; the payout itself is a small slice of earnings.
Key risk: Refining margins — crack spreads drive Valero's earnings, and they swing hard with crude and product markets. The payout is a small slice of earnings today, but a margin collapse is what would test it.
Changes if: The payout pushes well past 10.98% on a refining-margin downturn, or the board holds the rate flat after the run of annual increases.
- ✓Payout-coverage check: 10.98% trailing payout ratio — comfortably covered.
- ✓Yield check: 1.14% indicated — $1.20/qtr × 4 at the $419.28 close on Oct. 23, 2026. Real, earned yield.
- ✓Dividend growth check: Raised to $1.20 in January 2026 from $1.13 — the latest in a run of annual increases.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.