Exxon and Chevron raise dividends
ExxonMobil and Chevron, the two largest US oil companies by market capitalisation, have sharply increased their dividends, in a sign of confidence in future earnings. Exxon raised its quarterly dividend by 21 per cent. Chevron by 11 per cent.
Exxon, which reports first-quarter earnings on Thursday, declared a dividend of 57 cents a share for the second quarter, up from 47 cents in the first quarter.
The consensus of analysts’ forecasts is that earnings will have fallen compared to the equivalent period of 2011, under pressure from weak US natural gas prices and a fall in production.
However, the increase in the dividend indicates confidence in the long term outlook and brings Exxon closer to the other large US oil groups in terms of dividend yield.
At Wednesday’s closing price of $86.85, Exxon’s shares would yield 2.6 per cent if the dividend were continued at 57 cents per quarter.
Chevron, which reports its first-quarter earnings on Friday, declared a dividend of 90 cents for the second quarter, up from 81 cents in the first. At Chevron’s Wednesday closing price of $103.85, that dividend maintained for a year would give a yield of 3.5 per cent.
John Watson, Chevron’s chief executive, said in a statement: “We continue to share our success with our shareholders in the form of meaningful dividend growth. This reflects the strength of our current portfolio and our confidence in the company’s compelling growth prospects.”
He added that 2012 marked 100 years of dividend payments by Chevron and its predecessor companies.
ConocoPhillips, the third-largest US oil company, this week reiterated its commitment to sustaining a high dividend payment after the demerger of its refining, marketing, chemicals and pipelines business takes effect on May 1.
Conoco’s shares yield 3.7 per cent, higher than either Exxon or Chevron, based on the past four quarters’ dividends and a closing share price on Wednesday of $71.02.