Elevator Pitch
I continue to have a Buy rating assigned to Occidental Petroleum Corporation (NYSE:OXY). My prior March 22, 2022 article for OXY focused on the company's stock price outlook. In this article, I touch on Occidental Petroleum's attractiveness as a potential dividend play from the perspective of income-focused investors.
Occidental Petroleum is a safe dividend stock in my opinion, given its consistent dividend payment track record, and the fact that deleveraging has boosted free cash flow by reducing finance costs. Although OXY's current consensus forward dividend yield below 1% is not particularly appealing, but its expected total shareholder return yield could be as high as 6.6%. Furthermore, Occidental Petroleum's valuations could further re-rate, if and when de-leveraging and asset sale catalysts are realized.
OXY Stock Key Metrics
In my earlier update for Occidental Petroleum, my emphasis was on OXY's credit metrics, more specifically the decrease in the company's net debt.
Following my previous article, Seeking Alpha News reported on March 31, 2022 that OXY's CEO Vicki Hollub "paid $798K on March 28 for 14,191 OXY shares at an average price of $56.24." Such insider trading activity metrics are worth paying attention to.
The average purchase price for the recent insider transaction involving Occidental Petroleum's CEO is just -11% below OXY's 52-week high of $63.24 recorded on March 23, 2022. Hollub probably thinks that Occidental Petroleum's current valuations are still appealing. As a reference, the market is now valuing OXY at a consensus forward next twelve months' free cash flow yield of 21.2% based on its last traded share price of $56.10 as of April 6, 2022 and as per S&P Capital IQ data.
Separately, Hollub owns 490,672 shares of OXY after the recent insider purchase, which is worth approximately $27.5 million based on Occidental Petroleum's last done price. As such, it is reasonable to assume that OXY shares account for a significant part of Hollub's net worth. In that respect, the interests of OXY's CEO are aligned with that of minority shareholders. This also means that it is more likely that Occidental Petroleum will return a greater proportion of its excess cash flow to its shareholders, and dividends are one of the key capital allocation and capital return choices.
In the next two sections of the current article, I discuss Occidental Petroleum's dividends.
Is OXY's Dividend Yield Good?
OXY currently offers consensus forward fiscal 2022, 2023 and 2024 dividend yields of 0.85%, 0.95% and 1.42%, respectively. This is based on the assumption that Occidental Petroleum pays out dividends per share of $0.47, $0.53, and $0.79, respectively in the next three fiscal years.
Based on current market expectations, OXY's dividend yield is not good. The energy sector's median forward dividend yield is much higher at 3.79%. Occidental Petroleum's forward FY 2022 dividend yield of 0.85% is also about -50 basis points lower as compared to the S&P 500's dividend yield of approximately 1.35% at the time of writing.
However, there is a good chance that Occidental Petroleum's future dividend yield could potentially be better than what the market expects.
OXY's Q1 2022 dividend per share was $0.13. If the company maintains the same quarterly dividend for full-year 2022, this will translate to an annual dividend of $0.52 per share, which is higher than the 2022 consensus dividend per share forecast of $0.47.
Also, Occidental Petroleum stressed at the company's recent Q4 2021 earnings briefing on February 25, 2022 that its "intention" is to "initially increase the dividend to a level that approximates the yield of the S&P 500." OXY's dividend yield is now much lower than that of the S&P 500, because the company's share price rose from $38.74 as of February 25, 2022 to $56.10 as of April 6, 2022. It is possible that OXY might take this into consideration and raise its quarterly dividends in subsequent quarters so as to match up with the S&P 500.
More importantly, investors should consider the total shareholder return yield, rather than just dividend yield. Based on my estimates, OXY could potentially offer a total shareholder return yield (sum of share buybacks and dividends per share divided by stock price) of 6.6% based on $0.52 in dividends per share and its new $3 billion ($3.20 on a per share basis assuming buybacks are completed in full in 2022) share repurchase plans (as revealed at Q4 2021 earnings briefing).
Is OXY Stock's Dividend Safe?
For income-focused investors, the absolute dividend yield is not the only consideration. There are stocks that boast high forward dividend yields, but have a high risk of future dividend cuts. As such, these stocks might not be safe dividend plays even if their consensus (average of sell-side's estimates) forward dividend yields are very attractive.
In contrast, there are three key reasons why OXY stock's dividend is considered to be safe.
Firstly, Occidental Petroleum emphasized at its fourth-quarter investor briefing that the company's Q1 2022 dividend per share of $0.13 is "sustainable in a low price environment." In projecting the company's future cash flows and analyzing potential capital allocation options, OXY has assumed a reasonably conservative "$40 WTI environment."
Secondly, OXY disclosed at the recent quarterly earnings call that the company's "interest and financing costs" will decline "by almost $250 million per year going forward" as a result of its deleveraging efforts and this "will fund approximately half of the increase in our common dividend" in Q1 2022. In other words, the reduced interest expenses brought about debt reduction offer a "permanent" and "sustainable" boost to Occidental Petroleum's future free cash flow.
Thirdly, Occidental Petroleum has a decent dividend payout track record. The company has paid out dividends consistently for 32 years across up- and down-cycles in the energy market. This translates into an implicit commitment for the company to continue paying dividends to its shareholders in the future. As such, there is only a low probability that OXY will totally omit dividends in the future.
In conclusion, OXY is a safe dividend stock taking into account the relatively low risk of either a dividend cut or a dividend omission going forward.
Is Occidental Petroleum A Good Long-Term Stock?
I have a favorable view of Occidental Petroleum's long-term prospects in relation to the company's shareholder capital return potential.
As I mentioned earlier in this article, OXY's dividend per share is forecasted by sell-side analysts to grow to $0.79 in fiscal 2024, which would translate into a forward dividend yield of 1.42%, which is comparable with the current yield for the S&P 500 at 1.35%. Occidental Petroleum also has plans to commence a $3 billion share repurchase program as I noted in a prior section of the current article.
Looking ahead, Occidental Petroleum's future capital return will be supported by further debt reduction and additional asset sales. According to sell-side consensus financial estimates sourced from S&P Capital IQ, OXY is expected to be in a net cash financial position by FY 2024. If and when Occidental Petroleum secures investment grade credit ratings (this should be much earlier than 2024 with OXY continuing to pay off debt), it will be able to either refinance its existing debt at lower interest rates or seeking other low-cost financing alternatives, which will in turn boost future free cash flow.
Separately, OXY also reiterated at the company's fourth-quarter investor briefing its "intention to continue seeing opportunities to optimize our portfolio to create shareholder value." With energy prices still elevated, there could be more opportunities for Occidental Petroleum to further streamline its asset portfolio (i.e. divestments) and generate more free cash flow.
Is OXY Stock A Buy, Sell, or Hold?
OXY stock stays as a Buy. In my previous update for OXY published on March 22, 2022, I highlighted that "Occidental Petroleum's valuations are appealing" and stressed that "a further reduction in OXY's financial leverage and the commencement of share repurchases are catalysts that will help to re-rate its shares." My positive views with regards to OXY have not changed. In this article, I also mention the possibility of higher-than-expected dividends for Occidental Petroleum, and noted that OXY could potentially boast an attractive forward total shareholder return yield of 6.6%. This reinforces my Buy rating for OXY's shares.
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FAQs
Is Occidental Petroleum A Safe Dividend Stock Now? (NYSE:OXY)? ›
In conclusion, OXY is a safe dividend stock taking into account the relatively low risk of either a dividend cut or a dividend omission going forward.
What is the outlook for OXY 2023? ›On the 11th of June 2023 Occidental Petroleum is traded for 59.32. The entity has historical hype elasticity of 0.01 and average elasticity to hype of competition of -0.01. Occidental is anticipated to increase in value after the next headline with the price projected to jump to 59.33 or above.
Is OXY stock expected to go up? ›Stock Price Forecast
The 23 analysts offering 12-month price forecasts for Occidental Petroleum Corp have a median target of 68.00, with a high estimate of 82.00 and a low estimate of 54.00. The median estimate represents a +14.63% increase from the last price of 59.32.
Average Price Target
Based on 14 Wall Street analysts offering 12 month price targets for Occidental Petroleum in the last 3 months. The average price target is $71.71 with a high forecast of $82.00 and a low forecast of $61.00. The average price target represents a 20.89% change from the last price of $59.32.
Occidental Petroleum has received a consensus rating of Hold. The company's average rating score is 2.35, and is based on 7 buy ratings, 10 hold ratings, and 2 sell ratings.
What is the stock price forecast for OXY in 2024? ›Future price of the stock is predicted at 94.911476700582$ (59.999% ) after a year according to our prediction system. This means that if you invested $100 now, your current investment may be worth 159.999$ on 2024 June 12, Wednesday.
What is the projected price for OXY stock? ›Based on short-term price targets offered by 19 analysts, the average price target for Occidental Petroleum comes to $69.74. The forecasts range from a low of $60.00 to a high of $82.00. The average price target represents an increase of 17.57% from the last closing price of $59.32.
What will OXY stock be worth in 5 years? ›quote is equal to 60.040 USD at 2023-06-08. Based on our forecasts, a long-term increase is expected, the "OXY" stock price prognosis for 2028-06-02 is 120.408 USD. With a 5-year investment, the revenue is expected to be around +100.55%. Your current $100 investment may be up to $200.55 in 2028.
What is the price prediction for OXY in 2025? ›The Occidental Petroleum Corporatio stock prediction for 2025 is currently $ 37.97, assuming that Occidental Petroleum Corporatio shares will continue growing at the average yearly rate as they did in the last 10 years. This would represent a -0.73% increase in the OXY-WT stock price.
What is the analyst price target for OXY? ›| High | $85.00 |
|---|---|
| Median | $68.00 |
| Low | $54.00 |
| Average | $68.96 |
| Current Price | $59.81 |
Is OXY stock undervalued? ›
Compared to the current market price of 59.05 USD, Occidental Petroleum Corp is Undervalued by 22%.
How much debt does OXY currently have? ›What Is Occidental Petroleum's Debt? You can click the graphic below for the historical numbers, but it shows that Occidental Petroleum had US$19.8b of debt in March 2023, down from US$26.3b, one year before. However, because it has a cash reserve of US$1.17b, its net debt is less, at about US$18.6b.
How much debt does OXY have over time? ›Occidental Petroleum long term debt for the quarter ending March 31, 2023 was $19.645B, a 24.05% decline year-over-year. Occidental Petroleum long term debt for 2022 was $19.67B, a 33.17% decline from 2021. Occidental Petroleum long term debt for 2021 was $29.431B, a 17.66% decline from 2020.
What stocks is Warren Buffett buying? ›Paramount Global (PARA) and Louisiana Pacific (LPX) were new positions in Berkshire's portfolio last year. Buffett first bought Paramount PARA +0.1% in the first quarter of 2022 and Louisiana Pacific in the third quarter of 2022. He's owned Apple since 2016.
Is OXY a blue chip stock? ›There are many cheap blue-chip stocks to choose from, but I'll take Occidental Petroleum (NYSE:OXY).
What is Warren Buffett currently investing in? ›The current portfolio value is calculated to be $325.11 Bil. The turnover rate is 2%. In Warren Buffett's current portfolio as of 2023-03-31, the top 5 holdings are Apple Inc (AAPL), Bank of America Corp (BAC), American Express Co (AXP), Coca-Cola Co (KO), Chevron Corp (CVX), not including call and put options.
What is OXY historical dividend yield? ›OXY pays a dividend of $0.18 per share. OXY's annual dividend yield is 0.95%. When is Occidental Petroleum ex-dividend date? Occidental Petroleum's upcoming ex-dividend date is on Jun 07, 2023.
What is the volatility of OXY stock? ›OXY IV Percentile Rank
OXY implied volatility (IV) is 31.7, which is in the 3% percentile rank. This means that 3% of the time the IV was lower in the last year than the current level. The current IV (31.7) is -3.8% below its 20 day moving average (33.0) indicating implied volatility is trending lower.
Occidental Petroleum (OXY) has 3 splits in our Occidental Petroleum stock split history database.
How many shares of OXY are there? ›Occidental Petroleum 2020 shares outstanding were 0.919B, a 13.49% increase from 2019.
Who holds OXY stock? ›
| Stockholder | Stake | Total value ($) |
|---|---|---|
| Berkshire Hathaway, Inc. (Investm... | 23.52% | 13,026,339,032 |
| Dodge & Cox | 10.24% | 5,670,362,926 |
| The Vanguard Group, Inc. | 6.44% | 3,567,021,406 |
| SSgA Funds Management, Inc. | 5.41% | 2,997,172,448 |
| Previous Close | 57.66 |
|---|---|
| Ask | 0.00 x 1300 |
| Day's Range | 57.53 - 59.04 |
| 52 Week Range | 54.30 - 77.13 |
| Volume | 10,150,678 |
One OXY share bought prior to August 16th, 2006 would equal to 2.0875488330161 OXY shares today.
How much debt does NYSE Oxy Financials have? ›As you can see below, Occidental Petroleum had US$19.1b of debt at March 2023, down from US$26.3b a year prior. On the flip side, it has US$1.17b in cash leading to net debt of about US$17.9b.
What is the profit margin for OXY stock? ›Occidental Petroleum net profit margin as of March 31, 2023 is 27.06%.
Will OXY pay a dividend? ›Occidental Petroleum shareholders who own OXY stock before this date will receive Occidental Petroleum's next dividend payment of $0.1800 per share on 2023-07-14. Occidental Petroleum's next ex-dividend date has not been announced yet. Add OXY to your watchlist to be reminded before OXY's ex-dividend date.
How high will gas prices be in 2025? ›| Year | Minimum Price | Average Price |
|---|---|---|
| 2023 | $2.78 | $3.47 |
| 2024 | $5.09 | $5.79 |
| 2025 | $7.41 | $8.10 |
| 2026 | $9.72 | $10.41 |
Gas price prediction December 2025: Gas's price for December 2025 according to our analysis should range between $4.90 to $5.64 and the average price of GAS should be around $5.27.
What is the future of OXY? ›Future Growth
Occidental Petroleum's earnings is forecasted to decline at an annual rate of -18% and its revenue is expected to decline at -6.9% annually. EPS is expected to decline by 18.7%. Return on equity is forecast to be 17.9% in 3 years.
Are Price Targets Accurate? Despite the best efforts of analysts, a price target is a guess with the variance in analyst projections linked to their estimates of future performance. Studies have found that, historically, the overall accuracy rate is around 30% for price targets with 12-18 month horizons.
Is Apple stock a buy sell or hold? ›
Apple's analyst rating consensus is a Strong Buy. This is based on the ratings of 29 Wall Streets Analysts.
Is OXY a good company? ›Oxy consistently ranks among the safest companies in the United States.
Is undervalued stock a good buy? ›Yes. Generally, undervalued shares are considered good investments as their market price eventually returns to their intrinsic value. And when that happens, the investor can gain from the variation between the purchase price and the current market price.
Is Warren Buffett going to buy OXY? ›In August 2022, the Federal Energy Regulatory Commission granted Buffett and Berkshire Hathaway approval to purchase up to 50% of available OXY stock. "We love the shares we have," Buffett told investors earlier this month.
Did Berkshire Hathaway buy OXY? ›May 18 (Reuters) - Berkshire Hathaway Inc (BRKa. N) said on Thursday it had acquired more shares of Occidental Petroleum Corp (OXY. N), boosting its stake in the oil company to 24.4%.
How many acres does OXY own? ›With a position of approximately 2.9 million net acres in Texas and New Mexico, our combined Permian Basin portfolio of conventional and unconventional acreage differentiates us from our competitors.
How many shares of OXY does Warren Buffett have? ›With Berkshire Hathaway's recent OXY purchases, Buffett now holds 222 million OXY shares worth around $13 billion, or a 24.9% stake in the company.
What is the number one stock Warren Buffett owns? ›Share of Berkshire's Portfolio
Apple is the world's most valuable public company and Warren Buffet's largest stock holding.
In Bill Gates's current portfolio as of 2023-03-31, the top 5 holdings are Microsoft Corp (MSFT), Canadian National Railway Co (CNI), Berkshire Hathaway Inc (BRK. B), Waste Management Inc (WM), Caterpillar Inc (CAT), not including call and put options.
Who are the big investors like Warren Buffett? ›- Bill Ackman. Bill Ackman manages hedge fund Pershing Square Capital Management. ...
- Benjamin Graham. Benjamin Graham was an investing pioneer. ...
- Warren Buffett. Buffett might be the most famous investor of all. ...
- John (Jack) Bogle. ...
- Cathie Wood. ...
- Peter Lynch. ...
- David and Tom Gardner. ...
- Other famous investors.
What are the 5 highest dividend paying stocks? ›
| Name | Price | Price Change |
|---|---|---|
| IBM International Business Machines | $136.42 | $1.12 (0.83%) After 0.16% |
| CVX Chevron | $157.33 | $1.53 (-0.96%) After 0.02% |
| EOG EOG Resources | $113.92 | $2.33 (-2%) After 0.16% |
| ET Energy Transfer | $12.61 | $0.13 (-1.02%) After 0.08% |
- Cisco CSCO.
- Comcast CMCSA.
- Medtronic MDT.
- Gilead Sciences GILD.
- Duke Energy DUK.
- Blackstone BX.
- Truist Financial TFC.
- Phillips 66 PSX.
| Dividend ETFs | Dividend Yield |
|---|---|
| Lockheed Martin Corporation (LMT) | 2.7% |
| Merck & Company, Inc. (MRK) | 2.6% |
| Air Products and Chemicals, Inc. (APD) | 2.6% |
| Automatic Data Processing, Inc. (ADP) | 2.4% |
Is Bank of America a good investment? Bank of America stock can be a good investment depending on your entry price and holding time horizon. Historically, Bank of America stock has a five-year performance of down (1.4%), but its 10-year performance is up 154%.
Is Chevron stock a buy? ›CFRA analysts Stewart Glickman upgraded Chevron stock to a "Buy" rating up from "Hold." Glickman maintained a 172 price target on CVX shares, saying he estimates the deal would boost CVX's share count by 4.6%.
Does Warren Buffett own Johnson and Johnson? ›Berkshire Hathaway's Johnson & Johnson Stake
Warren Buffett acquired 327 Thousand Johnson & Johnson shares worth $52.3 Million. That's 0.02% of their equity portfolio (38th largest holding). The first Johnson & Johnson trade was made in Q1 2006.
Occidental Petroleum long term debt for the quarter ending March 31, 2023 was $19.645B, a 24.05% decline year-over-year. Occidental Petroleum long term debt for 2022 was $19.67B, a 33.17% decline from 2021. Occidental Petroleum long term debt for 2021 was $29.431B, a 17.66% decline from 2020.
How often does OXY pay dividends? ›Regular payouts for OXY are paid quarterly.
What will spell price be in 2025? ›It is assumed that in 2025, the minimum SPELL price might drop to $0.006, while its maximum can reach $0.007. On average, the trading cost will be around $0.006.
Is Occidental Petroleum a good long term investment? ›Occidental Petroleum Corporation has a Long-Term Technical rank of 25. This means that trading over the last 200 trading days has placed the company in the lower half of stocks with 75% of the market scoring higher. In the Oil & Gas E&P industry which is number 136 by this metric, OXY ranks better than 136% of stocks.
What family profited from OxyContin? ›
Purdue Pharma and the Sackler family reach $6 billion OxyContin settlement : NPR. Purdue Pharma and the Sackler family reach $6 billion OxyContin settlement The deal, hashed out over weeks of intense negotiations, raises the amount paid by the Sacklers by more than $1 billion.