uploads///ECA Q Dividends

Analyzing Encana’s Dividends and Dividend Yields

By

Jun. 13 2016, Updated 8:04 p.m. ET

Encana’s dividends and dividend yields

On March 31, 2016, Encana (ECA) paid a dividend of $0.02 per share on its common stock. This was its dividend payment for 1Q16. For 2015, ECA paid a total dividend of $0.28 per share on its common stock.

On May 25, 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, was ~3.7%.

Article continues below advertisement

Encana’s dividend history

From 2Q11 to 3Q13, ECA paid a dividend of $0.20 per share on its common stock. In 4Q13, as part of its transformation plan, Encana reduced its dividend payment to $0.07 per share. This dividend payment of $0.07 per share continued until 4Q15.

As seen in the above chart, Encana’s dividend yield rose from 4Q14 to 4Q15 mainly due to its falling stock price. ECA’s stock price is in a downtrend due to falling natural gas (UNG) prices. When a stock’s price falls, its dividend yield increases. Encana’s five-year average dividend yield is ~3.5%.

Encana’s future dividend

In February 2016, ECA announced a ~79% reduction in its quarterly dividend on its common stock. This will bring its 2Q16 dividend to $0.02 per share. The reduced dividend will provide ~$100 million of additional cash flow to ECA on an annualized basis. The company’s indicated annual dividend rate for 2016 is $0.06 per share.

Other upstream players

As of May 25, 2016, upstream companies Range Resources (RRC), EOG Resources (EOG), Marathon Oil (MRO), and Pioneer Natural Resources (PXD) had trailing-12-month dividend yields of ~0.42%, ~0.92%, ~4.7%, and ~0.06%, respectively.

Due to the steep downtrend in energy prices, many upstream companies are cutting back on their dividends. In March 2016, Energen (EGN) announced that it had discontinued its cash dividend on its common stock in response to a 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 Energy Select Sector SPDR ETF (XLE) generally invests at least 95% of its total assets in oil and gas companies.

Advertisement

More From Market Realist