Stock Market Sell-Off: 1 Dividend Growth Stock Down 16% to Buy Right Now After Its Pullback

Core Viewpoint - Market sell-offs create opportunities for investors to acquire stocks at discounted prices, including steady dividend stocks like Murphy USA, which has seen a significant decline in share price despite strong operational performance [1][2]. Group 1: Company Overview - Murphy USA is the fourth-largest convenience store chain in the U.S., operating over 1,760 stores across 27 states and serving approximately 2 million customers daily [4]. - The company has been a strong performer since its market debut in 2013, achieving an 11-bagger return for investors [2]. Group 2: Operational Strengths - Despite a 22% decline in share price, Murphy USA's operations remain robust, with a focus on low prices and a strategic location adjacent to Walmart stores [5][6]. - The company has outperformed the U.S. fuel sales growth rate, achieving a 14% annual growth in gallons sold since 2013, compared to the 4% national average [7]. Group 3: Growth Strategy - Murphy USA plans to open 50 new stores annually and convert 30 kiosk stores into larger formats, resulting in a 4% annualized store count growth [8]. - The company has increased its gross profit margins from 5% in 2013 to 11% today, supported by a significant stock buyback program [8]. Group 4: Financial Performance - Management has reduced the outstanding shares by 57% since 2013, significantly boosting per-share financial metrics, including a tenfold increase in free cash flow per share [9][10]. - Murphy USA trades at a price-to-free cash flow (P/FCF) ratio of 23, which is below the S&P 500 average of around 32, indicating a submarket valuation despite historical outperformance [11][12]. Group 5: Dividend Growth - The company has increased its dividend for 12 consecutive quarters, nearly doubling its payments since 2021, with a current yield of 0.4% that utilizes only 9% of its free cash flow [14][15]. - This growing dividend serves as an additional method to reward shareholders alongside stock buybacks [15]. Group 6: Overall Assessment - Murphy USA is positioned as a staple goods provider with consistent cash flows, allocating half of its cash to new store growth and the other half to shareholder returns through buybacks and dividends [16].