Oil Stock Dividend Safety


Lately, I’ve been reviewing the relationship between dividends and earnings (as well as cash flow) among five of the six energy supermajors on the planet: ExxonMobil, Chevron, BP, Royal Dutch Shell, and ConocoPhillips.

And I was struck by one fact in particular: the dividends at all five companies consumed less than 40% of the cash flow per share (note: I normalized the figures at BP to adjust for the asset shedding in response to the potential litigation risk). Considering that Exxon paid out 76.7% of its cash flow as dividends in 1968, this is marked shift in the general strategy of the oil supermajors over the past several decades.

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Originally posted 2013-06-25 02:25:48.