The board of directors of Occidental Petroleum Corporation (OXY - Free Report) has approved a 1.3% increase in its quarterly dividend rate. The revised dividend of 76 cents per share will be distributed on Oct 14, 2016 to shareholders of record at the close of business on Sep 9.
The latest hike marks an increase of a penny from the last dividend rate of 75 cents per share and it reflects management's confidence in the company’s long-range financial strength and performance. The new annualized dividend amounts to $3.04 per share, up from $3.00 paid earlier, resulting in a dividend yield of 3.94%.
Occidental Petroleum’s management has persistently increased its dividend payout for last 14 years and it has been over 41 years that the company has paid quarterly cash dividends.
Occidental Petroleum follows a systematic capital investment program to boost reserves in the U.S. and Middle East.For 2016, the company projects capital expenditure of $3 billion, down nearly 50% from the 2015 level.
Despite the substantial reduction in capital investment, management raised its oil and gas production growth outlook to 4–6% from the previous projection of 2–4%. Production is now expected to be in the range of 585,000–600,000 BOE per day, up from the prior expectations of 570,000–585,000 BOE per day. We believe preserving liquidity without sacrificing production is an excellent strategy on the part of the company.
Note that this March, following move than a year-long slump, oil prices started gaining momentum on the back of declining production, which resulted from militant attacks in Nigeria, wildfires in Canada, falling rig count as oil companies halted drilling activities and talks of a pact among OPEC countries to suspend output until prices stabilize.
After hovering around the $50 mark for some time, however, oil prices started to drop again, following lack of cooperation from Iran on the much-anticipated OPEC pact. Adding to the woes was the devaluation of the yuan, as it indicates weak crude oil demand in China –a major consumer of crude.
Further, the latest press release from the U.S. Department of Energy depicted a lower-than-expected drop in oil inventory. Moreover, Baker Hughes Incorporated reported a rise in the U.S. oil rig count, indicating that shale drilling activities have resumed.
Zacks Rank and Other Stocks to Consider
Occidental Petroleum carries a Zacks Rank #3(Hold). Some better-ranked stocks in the Oil & Gas space include ConocoPhillips (COP - Free Report) and Marathon Oil Corporation (MRO - Free Report) , each carrying a Zacks Rank #2 (Buy).
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