The Energy sector's volatile nature, defined by sudden shifts in fortunes, is well-known. While investments in oil and natural gas have always been prone to price fluctuations, there has been a notable increase in uncertainty, particularly post-COVID-19.
In such an unpredictable market, a dividend raise acts as a vote of confidence from management. Typically, it signals optimism about the company's future, as increased dividends are often supported by anticipated cash flows. This move essentially reflects management's belief in the ability of future cash flows to cover the higher dividend payouts.
3 Companies Enhancing Their Payouts
Now, let's examine three energy companies — Liberty Energy LBRT, Canadian Natural Resources Limited CNQ and TotalEnergies SE TTE — that recently raised their dividends.
Liberty Energy is a premier provider of hydraulic fracturing and other auxiliary services to onshore exploration and production companies across multiple basins in North America.
LBRT said on Tuesday that it will pay out a cash dividend of 8 cents per share of record on Dec 6. The company’s dividend represents a 14% increase in its quarterly dividend rate, providing an annualized dividend of 32 cents per share. Agreed, the company’s current dividend yield is meager at 1.4%, but it is well protected with a payout ratio of just 11.
Next up is Canadian Natural Resources Limited, one of the largest independent energy companies in Canada. The company is engaged in the exploration, development and production of oil and natural gas. Canadian Natural Resources boasts a diversified portfolio of crude oil (heavy as well as light), natural gas, bitumen and synthetic crude oil.
Last week, CNQ increased the quarterly dividend by 7%. The Zacks Rank #3 (Hold) company will pay a dividend of 56.25 Canadian cents per share against 52.50 Canadian cents last quarter. Calculating a 4.6% annualized yield, this payout increase comes into effect with the one to be paid on Jan. 3, 2025.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Finally, we have France-based TotalEnergies SE. It is among the top five publicly traded global integrated oil and gas companies based on production volumes, proved reserves and market capitalization.
Earlier this month, TTE announced a 5% increase in dividends per share for 2025, plus $2 billion in buybacks per quarter. The company indicated that, if necessary, it could leverage borrowing to maintain this pace, supported by its low debt-to-equity ratio and strong credit rating.
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TotalEnergies SE Sponsored ADR (TTE) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
