Marathon Petroleum Returned $4.5 Billion to Shareholders in 2025. Here's Why It Could Happen Again.
Key Points
Quarterly cash flow reached its highest level in two years.
MPLX distributions to Marathon are growing at a 12.5% annual clip.
Management expects 2026 capital returns to keep pace with last year.
Marathon Petroleum (NYSE: MPC), the largest independent U.S. refiner, is up 21% this year after fourth-quarter adjusted earnings of $4.07 per share crushed analyst expectations. Refining margins did the heavy lifting, with the company capturing 114% of the benchmark crack spread, up from 96% in the third quarter. That drove cash from operations to $2.7 billion, nearly 60% above the prior year.
During the year, Marathon returned $4.5 billion to shareholders through a combination of share repurchases and dividends. The cash return story, though, is getting stronger from here, and it doesn't need peak margins to hold.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
A two-pronged cash flow model
The company runs on two profit engines. MPLX LP (NYSE: MPLX), its midstream subsidiary, owns pipelines and processing plants that generate fee-based income moving natural gas and liquids from wellhead to market.
The refining segment processes over 3 million barrels per day across three regions, turning crude into gasoline, diesel, and jet fuel. Refiners measure their execution against a benchmark crack spread, the theoretical margin from processing a barrel of crude. Oil prices have pulled back while refined fuel demand has held up, widening that spread.
Marathon's refining margin hit $18.65 per barrel in the fourth quarter, up 44% year over year. Valero (NYSE: VLO) managed just $13.61 over the same period.
Image source: Getty Images.
The other half of Marathon's story runs through MPLX, where the distributions don't swing with crack spreads. That's what separates Marathon from a pure refiner. MPLX distributions to Marathon are set to exceed $3.5 billion annually over the next two years, up from $2.8 billion.
That income stream alone covers the dividend and base capital spending, while the refining segment's cash flow goes toward buybacks. On the fourth-quarter call, management said it expects the repurchase pace to hold this year, with $4.4 billion in buyback authorization still on the books.
What margins need to do next
The primary risk is that Q4's refining margin is cyclically elevated. If crack spreads compress, it would hit the refining segment first, and it accounts for roughly half of the company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
Management sees tight global refining supply and steady distillate demand into 2026. Regional closures, including a California refinery this spring, further tighten the domestic market.
The stock currently sits around $200 per share, with a 1.9% dividend yield. At about 7.4 times trailing EBITDA and roughly 15 times forward earnings, Marathon is fairly valued for a refiner with this much midstream stability. How margins hold through 2026, as new Asian refining capacity comes online, is the one variable worth watching.
Should you buy stock in Marathon Petroleum right now?
Before you buy stock in Marathon Petroleum, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Marathon Petroleum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $424,262!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,163,635!*
Now, it’s worth noting Stock Advisor’s total average return is 904% — a market-crushing outperformance compared to 194% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of February 21, 2026.
Bryan White has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Related Articles
Nikkei Index Heading Toward 60,000? Why Is Global Capital Betting on Sanae Takaichi? Will Japan’s Stock Market Continue to Hit New Highs in 2026?
TradingKey - In February 2026, the Tokyo stock market once again became the epicenter of global financial markets. Following a landslide victory by the Sanae Takaichi-led Liberal Democratic Party in the Lower House elections, the Nikkei 225 Index hit consecutive record highs within just a few days, targeting the 60,000-point milestone.
Will Micron Be the 2026 AI Winner as the Memory Supercycle Begins?
Recently, Micron has focused on premium areas such as High-Bandwidth Memory that plays alongside accelerators to feed AI models, and adding capacity with an eye on pricing discipline.
Stock Market Crash 2026: What Fed Signals and Economic Data Mean for Investors
TradingKey - The possibility of a stock market crash occurring in 2026 is becoming increasingly likely as investor sentiment continues to decline.
New Fed Chair Warsh Takes Office: Major Shift in Monetary Policy? US Dollar Short-Term Rebound, 2026 Investment Strategy Analysis
TradingKey - At the start of 2026, global financial markets witnessed a major leadership change as U.S. President Trump officially nominated Kevin Warsh as the next Federal Reserve Chair. Pending Senate confirmation, he will succeed Jerome Powell this May to lead the world’s most influential central bank.
