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Analyzing Devon Energy’s Dividends and Dividend Yields

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Devon Energy’s dividends and dividend yields

On March 31, 2016, Devon Energy (DVN) paid a dividend of $0.24 per share on its common stock. This was its dividend payment for 1Q16. In 2015, DVN paid a total dividend of $0.96 per share on its common stock.

As of April 6, 2016, the company’s dividend yield, which measures the amount of cash flow an investor can get for each dollar invested in an equity position, stood at ~3.5%.

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Devon Energy’s dividends history

Since 2Q14, DVN has paid a quarterly dividend of $0.24 per share on its common stock. As seen in the above chart, DVN’s dividend yield has been rising since 3Q14, mainly because of the stock’s falling price. As we saw in Part One of this series, DVN’s stock price is in a downtrend due to falling crude oil (USO) and natural gas (UNG) prices. When a stock price falls, its dividend yield rises. DVN’s five-year average dividend yield is ~1.4%.

DVN’s future dividend

In February 2016, DVN announced a 75% reduction in the quarterly dividend on its common stock, which will bring its 2Q16 dividend to $0.06 per share. The reduced dividend will provide ~$320 million in additional cash flow to DVN on an annualized basis. DVN’s indicated annual dividend rate for 2016 is $0.42 per share.

Other upstream players

As of April 6, 2016, other upstream companies Noble Energy (NBL), EOG Resources (EOG), Marathon Oil (MRO), and Pioneer Natural Resources have trailing-12-month dividend yields of ~2.1%, 0.9%, 4.9%, and 0.1%, respectively.

Due to the steep downtrend in energy prices, many upstream companies are cutting back on dividends. Last month, Energen (EGN) announced that it had discontinued the cash dividend on its common stock in response to the significant fall in energy prices.

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) generally invests at least 80% of its total assets in oil and gas exploration companies. The First Trust ISE Revere Natural Gas ETF (FCG) invests in natural gas producers.

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