How Did DVN’s Dividend Cut Affect Its Dividend Yield?
How did DVN’s revenues and EPS grow in 9M17?
Devon Energy Corporation’s (DVN) revenues recorded 13.0% growth in 9M17. Every segment drove the growth, which was offset by lower asset disposition. Its operating expenses decreased 32.0% in the absence of asset impairment and restructuring costs. As a result, the company recorded positive operating income in 9M17, unlike 9M16.
DVN’s other costs fell 66.0%, which translated into positive EPS (earnings per share) in 9M17, unlike 9M16. The company has not been able to generate positive free cash flow during this timeframe.
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How has DVN’s dividend yield evolved over the years?
Devon Energy Corporation’s 56.0% dividend cut in 2016 was followed by a 43.0% cut in 2017. Its stock price has dropped 11.0% on a YTD (year-to-date) basis after a gain of 43.0% in 2016. This trend explains the company’s downward sloping dividend yield curve.
Devon Energy Corporation has a dividend yield of 0.6% and a YTD return of -10.6%. The sector’s average dividend yield is 1.6% and its PE ratio is 34.0x.
Comparison with broad indexes
The S&P 500 (SPX-INDEX) (SPY) offers a dividend yield of 2.3%, a PE ratio of 22.7x, and a YTD return of 15.5%. The Dow Jones Industrial Average (DJIA-INDEX) (DIA) has a dividend yield of 2.3%, a PE ratio of 21.2x, and a YTD return of 18.7%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has a PE ratio of 25.4x and a YTD return of 25.4%.
The Vanguard International Dividend Appreciation Index Fund (VIGI) is a dividend ETF with 7.0% exposure to energy. It has a PE ratio of 26.8x and a dividend yield of 1.7%.
The PowerShares Dividend Achievers ETF (PFM) is a dividend ETF with 10.0% exposure to energy. It has a PE ratio of 20.1x and a dividend yield of 2.1%.