Pure-play energy refiners receive little investor attention. When people think about energy stocks, they usually think of large, global, full-spectrum players like Exxon Mobil (XOM) and Chevron (CVX); however, income-focused investors are aware of midstream companies with attractive yields and growing dividends.
Refining companies, which turn crude oil into fuels, are referred to as downstream energy companies. Pure-play refiners operate in a highly interesting energy subsector. For a refiner, both its inputs (crude oil) and its products (fuels like gasoline and jet fuel) have prices set in the commodity markets. As a result, refiners need to be highly efficient to remain profitable when commodity prices are unfavorable.
There are just three large refining companies:
- Marathon Petroleum Corp. (MPC), with a $53 billion market cap
- Phillips 66 (PSX), with a market cap of $57 billion
- Valero Energy Corp (VLO), with a $55 billion market value
Marathon Petroleum released fourth-quarter and full-year results, with some outstanding numbers. For reference, MPC currently trades for $190 per share.
For 2025, MPC reported net income of $4.0 billion, or $13.22 per share. This was up nicely from $10.08 per share for 2024. Cash from operations totaled $8.3 billion.
Marathon Petroleum’s management is focused on returning cash to investors. For 2025, $4.5 billion was paid out in dividends and share buybacks. From 2020 through 2025, the number of shares outstanding decreased by over 50%. Fewer shares automatically produce growing earnings per share.
Marathon Petroleum has consistently grown its common stock dividend by 10% annually. The company owns more than 60% of MPLX LP (MPLX), an energy midstream company. The growing distributions from MPLX to MPC are expected to fund MPC’s 2026 dividend and standalone capital.
For investors, MPC is a solid dividend growth stock. When profits are high, shares are repurchased, EPS continues to grow, and dividends are increased.
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