The Tax Cuts and Jobs Act of 2017 is expected to benefit multiple sectors. Energy, the seventh-largest sector weight in the S&P 500, paid one of the highest effective tax rates in corporate America prior to the tax reform passage, but the sector's tax rate is poised to dramatically decline.
While CRAK has been caught up in the recent equity market sell-off, sliding more than 7 percent over the past week, the exchange-traded fund is one of the best-performing energy funds over the past year, surging more than 40 percent over that time.
Enviable Positioning
Tax reform is seen as a boon for the energy sector, but the benefits are unlikely to be evenly distributed across the entire sector.
Tax Reform Could Help Refiner Dividends
CRAK yields 2.21 percent, which is decent though not spectacular. However, tax reform could benefit the dividend positions of some of the fund's US-based holdings.
“Fitch expects increased tax-related cash flows will partly be used to help support refiner distribution policies,” said the ratings agency. “Marathon Petroleum cited extra cash from tax relief as a factor in its decision to increase its dividend by 15 percent. Valero did not directly link its 14 percent dividend increase to the tax legislation, but did cite the cash tax benefit and noted that it had paid out above its target range for payouts in 2017.”
Related Links:
© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
To add Benzinga News as your preferred source on Google, click here.
