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The Top 10 S&P 500 Companies with the Lowest Dividend Growth

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Part 4
The Top 10 S&P 500 Companies with the Lowest Dividend Growth PART 4 OF 18

How the Dividend Cut Affected APC’s Dividend Yield

What drove APC’s revenue growth in 9M17?

Anadarko Petroleum (APC) recorded 64.0% revenue growth in 9M17. Oil sales, natural gas liquids sales, gains on divestitures, and gathering, processing, and marketing sales drove this growth, which was offset by its natural gas sales.

APC’s US and international oil price and sales volumes improved in 9M17. Its US natural gas sales volumes fell as prices improved during this period, as did its US and international natural gas liquids sales volumes and prices.

How the Dividend Cut Affected APC’s Dividend Yield

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How did APC’s EPS improve in 9M17?

Anadarko Petroleum’s (APC) costs and expenses rose 34.0% during 9M17. Its exploration costs and impairment recorded marked increases during the period. The company’s negative operating income fell 49.0%, and its other expenses decreased 54.0%. A loss on its debt extinguishment charge was recorded in 1H16.

As a result, the company’s negative EPS fell 48.0% and remained in negative territory. Its free cash flow balance has remained negative since 2014.

How has APC’s dividend yield evolved over the years?

Anadarko Petroleum (APC) experienced a dividend cut of 81.0% in 2016. The company has maintained the same dividend per share in 2017, and its price fell 26.0% on a year-to-date (or YTD) basis after a 44.0% gain in 2016. This trend explains the downward sloping dividend yield curve in 2016 and the flattening of the curve in 2017.

Anadarko Petroleum has a dividend yield of 0.4% and a YTD return of -26.3%. In comparison, the sector’s average dividend yield is 1.6%, and its price-to-earnings (or 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 WisdomTree US LargeCap Dividend ETF (DLN) is a dividend ETF with exposure to Anadarko Petroleum Corporation. DLN has a PE ratio of 20.1x and a dividend yield of 2.5%.

The ALPS Sector Dividend Dogs ETF (SDOG) is a dividend ETF with 11.0% exposure to the energy sector. It has a PE ratio of 16.3x and a dividend yield of 3.3%.

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