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Occidental Returns More to Shareholders
COG OXY CWEI
Occidental Petroleum Corporation ( OXY - Analyst Report) continues to take initiatives to maximize shareholders’ wealth. The company announced that the board of directors has raised the quarterly dividend rate and authorized to repurchase an additional 30 million shares of its common stock.
The past record indicates Occidental Petroleum has been increasing dividend rates once every year. On this occasion, the company increased its quarterly dividend rate by 12.5% sequentially to 72 cents per share. The increased dividend will be paid on Apr 15, 2014 to stockholders of record as of Mar 10.
On an annualized basis, Occidental Petroleum’s dividend rate will come to $2.88 per share. The annual dividend yield will be a healthy 3.1%, higher than the industry average of 1.9%. The payment of incremental dividends will retain investors’ interest in the stock.
Apart from revising dividend rate, Occidental Petroleum also follows a steady share repurchase program. In 2013, the company repurchased approximately 11 million shares. This initiative will enable the company to improve its capital structure while reducing cost of equity. As of Feb 14 2014, Occidental Petroleum’s debt-to-equity ratio was 16.2%, lower than the industry average of 36.8%.
Occidental Petroleum plans to utilize its additional cash on hand and available balance from operating cash flow and proceeds from asset monetization to fund the share repurchase. The company had cash and cash equivalents of $3.4 billion as of Dec 31, 2013 and cash from operations of $12.9 billion in 2013.
Occidental Petroleum currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the same sector include Athlon Energy Inc. , Cabot Oil & Gas Corporation ( COG - Analyst Report) and Clayton Williams Energy, Inc. ( CWEI - Snapshot Report) , each with a Zacks Rank #1 (Strong Buy).