Assessing the Sustainability of Devon Energy Corp's Dividend
Devon Energy Corp (DVN, Financial) recently announced a dividend of $0.77 per share, payable on 2023-12-29, with the ex-dividend date set for 2023-12-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Devon Energy Corp's dividend performance and assess its sustainability.
Introduction to Devon Energy Corp (DVN, Financial)
Devon Energy, based in Oklahoma City, is one of the largest independent exploration and production companies in North America. The firm's asset base is spread throughout onshore North America and includes exposure to the Delaware, STACK, Eagle Ford, Powder River Basin, and Bakken plays. At year-end 2022, Devon's proved reserves totaled 1.8 billion barrels of oil equivalent, and net production that year was 611 thousand boe/d, of which oil and natural gas liquids made up 73% of production, with natural gas accounting for the remainder.
Devon Energy Corp's Dividend Track Record
Devon Energy Corp has maintained a consistent dividend payment record since 1993. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Examining Devon Energy Corp's Dividend Yield and Growth
As of today, Devon Energy Corp currently has a 12-month trailing dividend yield of 8.00% and a 12-month forward dividend yield of 6.64%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Devon Energy Corp's annual dividend growth rate was 145.40%. Extended to a five-year horizon, this rate decreased to 83.10% per year. And over the past decade, Devon Energy Corp's annual dividends per share growth rate stands at 7.40%.
Based on Devon Energy Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Devon Energy Corp stock as of today is approximately 164.64%.
Devon Energy Corp's Dividend Sustainability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Devon Energy Corp's dividend payout ratio is 0.59.
Devon Energy Corp's profitability rank, which offers an understanding of the company's earnings prowess relative to its peers, is 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported net profit in 5 years out of the past 10 years.
Growth Prospects and Future Outlook for Devon Energy Corp
To ensure the sustainability of dividends, a company must have robust growth metrics. Devon Energy Corp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Devon Energy Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Devon Energy Corp's revenue has increased by approximately 23.70% per year on average, a rate that outperforms approximately 74.94% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Devon Energy Corp's earnings increased by approximately 97.40% per year on average, a rate that outperforms approximately 90.72% of global competitors.
Concluding Thoughts on Devon Energy Corp's Dividend Outlook
In conclusion, Devon Energy Corp's consistent dividend payments, robust dividend growth rate, manageable payout ratio, fair profitability, and solid growth metrics paint a promising picture for value investors seeking reliable income streams. The company's ability to maintain a healthy balance between rewarding shareholders and reinvesting in its business operations is a testament to its strategic financial management. As the energy sector continues to evolve, Devon Energy Corp's adaptability and financial discipline may serve as a foundation for future dividend stability and growth. Investors considering adding DVN to their portfolios should weigh these factors alongside their individual investment goals and risk tolerance.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
