Its market value is down to $35 billion. Deepen your understanding of Responsible Investing. Make short-term dividend income. The price of oil has been hit by the coronavirus and … Use the Dividend Screener to find high-quality dividend stocks. Occidental Petroleum shares continued their recent descent Thursday, hitting a new 52-week low and their lowest level since 2005, amid investor concerns about the safety of the company’s lush dividend in the wake of the company’s third-quarter earnings report on Monday. SPDR S&P Oil & Gas Exploration & Production. Retirement news, reports, video and more. * Dividend.com does not provide financial advice and does not issue recommendations or offers to buy stock or sell any security. Practice management news, reports, video and more. On May 29th, 2020, Occidental Petroleum slashed the dividend a second time in response to COVID-19, low oil prices, and too high leverage. The company hasn’t spelled out what kind of debt reduction it expects to achieve from operating cash flow next year. Which type of investor describes you best? Gresh, one of the few Occidental bears on the Street, has an Underweight rating and a price target of $42 a share. Knowing your investable assets will help us build and prioritize features that will suit your investment needs. Long-term debt has grown from $10.2 billion in 2018 to $38.2 billion by 2019, while interest expenses grew from less than a half billion in 2018 to more than $1 billion by 2019. However, executives reaffirmed their commitment to the dividend on their earnings conference call Tuesday, with Chief Financial Officer Cedric Burgher saying, “Protecting our dividend is a top priority.”. The new reduced output announced in early May comes in effect from June. Learn from industry thought leaders and expert market participants. (BRKA), which burdens the company with $800 million in annual dividend payments for at least the next 10 years. Previously in March 2020, the company already reduced its dividend for the first time in 30 years by 86% to 11 cents per share. Find the dividend yield of the Oil & Gas Industry on our dedicated page here. Occidental Petroleum Slashed the Dividend Again. An error has occurred, please try again later. ConocoPhillips You can even screen stocks with DARS ratings above a certain threshold. https://www.barrons.com/articles/occidental-stock-hits-14-year-low-on-fears-of-a-dividend-cut-51573163364. Because of the possibility of human or mechanical error by Mergent's sources, Mergent or others, Mergent does not guarantee the accuracy, adequacy, completeness, timeliness or availability or for the results obtained from the use of such information. Dividend stocks making payouts in the next 10 business days and have a history of rebounding in price shortly thereater. After criticizing the Anadarko deal, he has promised to wage a proxy battle to take control of the company and is considering a push to put it up for sale. Notably, many analysts and investors were already highly critical of the $57 billion purchase prior to the current downturn in the oil market. The new dividend is payable on July 15 to stockholders of record as of June 15. Reproduction of such information in any form is prohibited. Dividend investors should carefully assess their holdings during the unprecedented COVID-19 outbreak to identify instances where companies may need to cut their dividends to support liquidity, as well as consider whether or not these cuts will be short-term or long-term in nature based on the strength of their balance sheet and diversity of their revenue. We like that. The oil company had already cut its dividend to 11 cents from 79 cents in March in order to help reduce its capital budget. Be sure to visit our complete recommended list of the Best Dividend Stocks. His view is that Hollub and Occidental management are under a lot of pressure to integrate the two companies and deliver promised synergies. How Is DOL's Rule on Lifetime Income Illustrations Going to Help You? In a client note Wednesday, J.P. Morgan analyst Phil Gresh wrote that a sharp reduction of two-thirds in the dividend, now $3.16 a share annually, “makes sense to us” given the company’s high debt burden and what Gresh sees as little or no debt reduction from operating profits next year despite a sharp reduction in capital spending. It’s uncertain how long the impact on the oil market will persist from a demand standpoint, which further complicates its cash flow outlook. The billionaire investor bought $10 billion worth of 8% preferred stock with warrants that cost the company about $800 million per year – although, it’s payable in cash or stock. The upshot is that the Berkshire Hathaway deal permits the company to pay preferred stock dividends in stock rather than cash to shore up liquidity, although it would dilute the number of shareholders. Chevron Occidental Stock Hits 14-Year Low on Fears of a Dividend Cut. Write to Andrew Bary at [email protected]. Helpful articles on different dividend investing options and how to best save, invest, and spend your hard-earned money. Knowing your AUM will help us build and prioritize features that will suit your management needs. Occidental Petroleum Corp. on Friday declared a regular quarterly dividend of one cent a share. Katz says he thinks investors will be “kicking themselves for selling here and not loading up on the stock.”. Check out our latest update to the Best Dividend Stocks List, wherein a... All stock quotes on this website should be considered as having a 24-hour delay. These problems led activist investor Carl Icahn to build a nearly 10% stake in the company by the end of last year. Upgrade to Premium to access your Watchlist and more. Write to Chris Wack at [email protected], Covid-19 Continues to Boost and Bust S&P 500 Companies, ConocoPhillips to Buy Shale Rival Concho for $9.7 Billion -- 3rd Update, ConocoPhillips to Buy Shale Rival Concho for $9.7 Billion -- 2nd Update, Global oil supply and demand to rebalance by end 2021 -Occidental CEO, Twilio, Dillard's rise; PG&E, Occidental Petroleum fall. What is the value of your investable assets? Occidental Petroleum had incurred significant debt to outbid Chevron Corporation (CVX) in its bet-the-company move to acquire Anadarko Petroleum and strengthen its position in the Permian Basin. You take care of your investments. The oil company had already cut its dividend to 11 cents from 79 cents in March in order to help reduce its capital budget. ’ (COP) move in 2016 to slash its dividend by two-thirds and focus on debt reduction, which the company has achieved. Occidental Petroleum’s decision to leverage up its balance sheet to acquire Anadarko proved to be an ill-fated decision – at least in the short-term. Occidental Petroleum Since the takeover battle began in April, Occidental’s stock is down 40%, while Chevron shares are off about 3%. Maintaining the dividend also is a priority for CEO Vicki Hollub, who pushed for the Anadarko deal despite shareholder objections and arranged a costly $10 billion sale of 8% preferred stock to Municipal bonds news, reports, video and more. This time the regular quarterly dividend was cut about 91% from $0.11 to $0.01 per share. Occidental is weighed down by about $47 billion in debt, a result of its controversial $57 billion purchase of Anadarko Petroleum in August, which drew criticism from shareholders like activist Carl Icahn as an expensive and ill-advised deal. https://www.dividend.com/news/2020/03/18/occidental-petroleum-slashes-dividend-after-30-years/. We've detected you are on Internet Explorer. The price of oil has been hit by the coronavirus and an oil-price clash between Russia and Saudi Arabia. Top Chemicals Firm With 15+ Years of Dividend Growth Reaffirms Its Position on Best Dividend Stocks List, Critical Facts You Need to Know About Preferred Stocks, Earn More With Dividend Stocks Than With Annuities for Your Retirement, Occidental Petroleum Slashes Dividend After 30 Years. The new dividend, along with the cut to the capital expenditure budget, conserves $4.1 billion of cash, annualized, equivalent to 12% of Oxy’s net … The drastic move is designed to bolster liquidity – alongside capital expenditure reductions and other cost-cutting efforts –in what has become a difficult market for oil companies. Debt issues may have provided a lot of kindling for the fire, but the collapse in oil prices was the spark that set it off. The company is relying heavily on asset sales to cut debt, but as Gresh points out, those sales come at the expense of current or future earnings power. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. An Exciting Time for Biotech Stocks & Their Dividends. “In Oxy’s case, similarly cutting the common dividend by 2/3 (from $2.8 billion to $1 billion) makes sense to us, especially given the $800 million preferred dividend obligation, which would allow for more sustainable organic deleveraging.” He wrote that Occidental could also consider selling its valuable chemicals business, which could be worth over $10 billion. The preferred stock is particularly onerous because Berkshire CEO Warren Buffett was able to get favorable terms—including a prohibition against redemption for 10 years. In his note, Gresh wrote that the company “can barely cover its total dividend (common plus preferred) obligation in 2020 at $60 a barrel Brent, suggesting little or no organic deleveraging, despite a $2 billion-plus capex cut versus original guidance.” Brent, the international crude benchmark, is now around $62 a barrel. Occidental Petroleum Corp. on Friday declared a regular quarterly dividend of one cent a share. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.
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