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Murphy Oil (MUR) Rewards Shareholders With 17% Dividend Hike
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Murphy Oil Corporation (MUR - Free Report) announced that its board of directors approved a 17% increase in the annualized dividend rate to 70 cents per share, up from the prior annualized rate of 60 cents.
The new quarterly dividend is payable on Jun 1, 2022 to stockholders of record as of May 16, 2022. Murphy Oil has a long history of dividend payments and has paid dividends to shareholders consecutively since 1989. Since 2012, MUR has returned $3.9 billion to its shareholders through buybacks and dividend payouts. Murphy Oil’s new dividend yield will be 1.72% compared with the Zacks S&P 500 composite's average of 1.45%.
Can Murphy Oil Sustain the Dividend Hike?
Murphy Oil has been transforming and expanding operations through acquisitions, divestitures and oil-weighted discoveries. Its focus on developing high-margin liquid assets is evident from the production mix. Murphy Oil’s Tupper Montney asset in Canada is one of the leading low-cost operating assets in North America. It expects to deliver production at a CAGR of 7% during the 2022-2024 period. MUR expects offshore production volumes to average 80 thousand barrels of oil equivalent per day (MBOEPD) during the 2022-2024 period. Due to the existing multi-basin assets, the company expects 2022 production in the range of 164-172 MBOEPD, comprising 52% oil and 57% liquids.
Murphy Oil has a history of efficiently managing its general and administrative (G&A) expenses. After lowering 2020 G&A expenses by 40% year over year, Murphy Oil further lowered the same by 13% year over year in 2021, thereby aiding margins. The company is maintaining a multi-basin portfolio, including onshore and offshore assets, for an additional risk reduction by entering into hedges and fixed-price forward sales contracts through 2024.
Hence, stable operating expenses, systematic hedges and strong production volumes will provide enough funds to sustain the dividend hike over the long term.
Improvement in Commodity Prices Aiding Dividend Hikes
The ongoing improvement in commodity prices in the recent past generated strong cash flows for energy companies. After making necessary investments to upgrade and strengthen their infrastructure, Oil & Gas companies are distributing excess cash as dividends to shareholders.
In February 2022, Devon Energy (DVN - Free Report) approved a 45% increase in the fixed quarterly dividend to $1 per share. Devon Energy has a current dividend yield of 6.9%, better than the Zacks S&P 500 composite’s yield of 1.45%.The long-term (three to five years) earnings growth of DVN is 51.4%.
In February 2022, Continental Resources announced a quarterly dividend payment of 23 cents per share, which increased 15% from 20 cents per share in the previous quarter. Continental Resources has a current dividend yield of 1.5%.The long-term earnings growth of CLR is 35.7%.
In February 2022, Diamondback Energy (FANG - Free Report) announced a quarterly dividend payment of 60 cents per share, which increased 20% from 50 cents per share in the previous quarter. Diamondback Energy has a current dividend yield of 1.8%. The long-term earnings growth of FANG is 22%.
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Murphy Oil (MUR) Rewards Shareholders With 17% Dividend Hike
Murphy Oil Corporation (MUR - Free Report) announced that its board of directors approved a 17% increase in the annualized dividend rate to 70 cents per share, up from the prior annualized rate of 60 cents.
The new quarterly dividend is payable on Jun 1, 2022 to stockholders of record as of May 16, 2022. Murphy Oil has a long history of dividend payments and has paid dividends to shareholders consecutively since 1989. Since 2012, MUR has returned $3.9 billion to its shareholders through buybacks and dividend payouts. Murphy Oil’s new dividend yield will be 1.72% compared with the Zacks S&P 500 composite's average of 1.45%.
Can Murphy Oil Sustain the Dividend Hike?
Murphy Oil has been transforming and expanding operations through acquisitions, divestitures and oil-weighted discoveries. Its focus on developing high-margin liquid assets is evident from the production mix. Murphy Oil’s Tupper Montney asset in Canada is one of the leading low-cost operating assets in North America. It expects to deliver production at a CAGR of 7% during the 2022-2024 period. MUR expects offshore production volumes to average 80 thousand barrels of oil equivalent per day (MBOEPD) during the 2022-2024 period. Due to the existing multi-basin assets, the company expects 2022 production in the range of 164-172 MBOEPD, comprising 52% oil and 57% liquids.
Murphy Oil has a history of efficiently managing its general and administrative (G&A) expenses. After lowering 2020 G&A expenses by 40% year over year, Murphy Oil further lowered the same by 13% year over year in 2021, thereby aiding margins. The company is maintaining a multi-basin portfolio, including onshore and offshore assets, for an additional risk reduction by entering into hedges and fixed-price forward sales contracts through 2024.
Hence, stable operating expenses, systematic hedges and strong production volumes will provide enough funds to sustain the dividend hike over the long term.
Improvement in Commodity Prices Aiding Dividend Hikes
The ongoing improvement in commodity prices in the recent past generated strong cash flows for energy companies. After making necessary investments to upgrade and strengthen their infrastructure, Oil & Gas companies are distributing excess cash as dividends to shareholders.
In February 2022, Devon Energy (DVN - Free Report) approved a 45% increase in the fixed quarterly dividend to $1 per share. Devon Energy has a current dividend yield of 6.9%, better than the Zacks S&P 500 composite’s yield of 1.45%.The long-term (three to five years) earnings growth of DVN is 51.4%.
In February 2022, Continental Resources announced a quarterly dividend payment of 23 cents per share, which increased 15% from 20 cents per share in the previous quarter. Continental Resources has a current dividend yield of 1.5%.The long-term earnings growth of CLR is 35.7%.
In February 2022, Diamondback Energy (FANG - Free Report) announced a quarterly dividend payment of 60 cents per share, which increased 20% from 50 cents per share in the previous quarter. Diamondback Energy has a current dividend yield of 1.8%. The long-term earnings growth of FANG is 22%.
Zacks Rank & Price Performance
Currently, Murphy Oil carries a Zacks Rank #3 (Hold). In the past six months, shares of MUR have rallied 45.7% compared with the industry’s 36.3% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research