Devon Energy Hikes Its Dividend

Devon Energy (DVN) declared a quarterly dividend of 8 cents a share, the first time it has raised its payout since slashing it in early 2016.


Getty Images/iStockphoto

The exploration-and-production company plans to raise its quarterly dividend by 2 cents a share, or 33%, from 6 cents.

The market welcomed the news.

Devon shares were trading at $32.21 Thursday afternoon, up more than 4% on the day. The stock has come under pressure this year along with some other energy names. One potential worry is that rising bond yields could increase debt-servicing costs for some of these companies.

Yet better news about dividends is becoming more common across the energy sector, which took a big hit after crude prices collapsed in 2014 and stayed low into 2016, before a partial recovery.

Speaking to analysts at a conference this week, Chevron (CVX) CEO Mike Wirth said the company's top priority is maintaining dividend growth. It increased its quarterly dividend in January to $1.12 a share, up from $1.08. He also pledged to maintain discipline on costs and capital spending.

"Dividend cuts from energy and related materials issues declined last year as prices stabilized," says Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Looking ahead, he expects more dividend increases in the energy sector, though some are coming after big cuts. "But the tide appears to have turned," he says.

"Broadly speaking, we have seen more buybacks than dividend increases, though the companies that do issue dividends have started to raise them," says Stewart Glickman, energy equity analyst at CFRA Research.

As to whether the companies in the sector will continue their discipline on managing costs and capital allocation, Glickman isn't so sure: "The unanswered question is: Will they stick to it? My gut instinct is that they will be tempted to add a few more crews or a few more wells that weren't part of the original budget if oil prices continue to move up."

Energy companies in the S&P 500 were recently yielding 3.0%, vs. 1.9% for the entire index.

Sign up to Review & Preview, a new daily email from Barron's. Every evening we'll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Latest Markets Videos


Barron's is a leading source of financial news, providing in-depth analysis and commentary on stocks, investments and how markets are moving across the world.

Learn More