Pioneer and 4 other energy stocks with attractive profits

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Oil and gas companies have increased their dividends in the past two years, becoming one of the industries with the best dividend payout.

Last year, the 50 largest oil and gas producing companies spent $59 billion on dividends and buybacks, up from $19 billion in 2021, according to Last week’s report from Ernst & Young.

The largest dividend payers in the energy sector in the S&P 1500 index include oil and gas producers and pipeline companies. The five stocks below have the highest returns among energy stocks with a market capitalization of more than $5 billion.

The company / index	Last price	market value (car)	Change since the beginning of the year	2023E Dividend Return
Civitas / Civi Resources	$80.13	$7.5	38%	9.2%
Antero Midstream/AM	11.94	5.7	11	7.5
Kinder Morgan/KMI	17.34	38.6	-4	6.5
Pioneer Natural Resources / BXD	233.78	54.5	2	6.0
Chord energy/CHRD	157.70	6.5	15	6.0

e = estimates

Source: Factset

Oil and gas producers have discovered a new way to pay dividends that maximize shareholder returns when commodity prices are high, as they have been over the past year. They pay a modest basic dividend every quarter and then add a variable dividend on top of that based on their cash flow.

The three producers in the list above —

Leading Natural Resources
,

state resources
,

And

chord energy

Variable dividend distribution.

Pioneer Corporation (Ticker: PXD), a major producer in the Permian Basin of Texas and New Mexico, was one of the first oil companies to announce a variable dividend policy, and it paid off for investors. In 2018, Payoneer paid just 32 cents per share. And with the stock trading at over $100 at the time, those dividends were just a small part of the investment case. And in 2022, it paid out $25.44, which is a huge benefit for investors. The stock has mostly traded between $200 and $250 in the past year, which means that investors who bought in at the right time got at least a 10% return on the dividend alone.

CIVI also rewarded shareholders. Civitas is one of the few oil and gas companies with operations in Colorado, which has stricter standards for oil exploration than states like Texas. However, Civitas frequently acquires other companies and has recently purchased tracts of land in the Permian Basin. In its most recent quarterly report, Civitas declared a basic dividend of 50 cents per share and a variable dividend of $1.24.

Houston-based Chord Energy (CHRD)’s variable dividend has also benefited shareholders over the past two years — last year it paid $27.03 per share — although the company has recently focused more on share buybacks. In fact, last quarter, buybacks accounted for nearly 90% of shareholder returns after accounting for its core earnings. “We aimed to increase share repurchases as a percentage of return on capital in recognition of the discount we believe Chord trades at compared to its peers and our intrinsic value,” the company said in its most recent earnings call.

Oil and gas pipeline operators have also increased their profits, although the size of their payments is surprisingly less than that of producers. So-called mid-energy companies have been paying out big dividends to investors for years, partly because of the legacy of their historic corporate structure as master limited partnerships, which are designed to send most of their spare cash flow to investors.

Although many of them have now been reorganized as traditional companies, they remain devoted to dividends.

Morgan kids

(quantitative) f

Antero middle of the road

(AM) are among the best dividend payers in the group.

Write to Avi Salzman at [email protected]