As oil prices declined, the dividend yield of energy stocks went up. If you are an income investor, stocks in the energy sector will more likely pique your interest.
The All-In-One Screener on GuruFocus allows investors to look for companies that pay high dividend and are also growing their dividend. Set the Dividend Yield to >3%, the Dividend Growth Rate to >10% and the Dividend payout to <0.4. If you click on the guru tab, you can also pick the guru of your choice to take a look at his/her dividend growth stocks. I chose Mario Gabelli (Trades, Portfolio) from the All-In-One Screener Gurus tab, since he recently added more shares to his portfolio, according to Real Time Picks.
The dividend growth stocks in Gabelli's portfolio that appear once the settings are applied are Chevron Corp (CVX, Financial) and Occidental Petrolium Corp (OXY, Financial).
CVX makes up 0.086% of Gabelli's overall portfolio, with 133,467 shares valued at $15.9 million and 0.01% of the company's shares outstanding.
CVX has continued to increase its dividends since 1987. The next payout date is set for March 10 at $1.07 a share, a 7% increase from last year's payout in March, in which shareholders were paid $1.00 a share. The current annual dividend is $4.28. Dividend yield is 3.84% as of today and the five-year growth rate is 10.30%.
Chevron's dividends per year have been $4.14 over the past 12 months and earnings per share have been $10.86. Shareholders should be cautious of the fact that EPS has taken a plunge, resulting in a risk for dividends. However, over the past 29 years, the company has shown consistent dividend growth, meaning there is a greater chance for this to continue. The current payout ratio is 43.5% and the P/E ratio is 9.48, which is close to the 2-year low of 8.63.
John Watson, Chevron's CEO stresses how important dividends are for the company: “The dividend is the highest priority of spend for us… we will work very hard on capex (capital expenditure) and Opex (operating expenditure) in order to get balanced in a couple of years.”
The company has around $13 billion to cover its dividend payments for this year.
“In 2014, we continued to fund investments in key major capital projects under construction and raised the dividend payout on our common shares for the 27th consecutive year,” Watson says. “We enter 2015 with the financial strength to meet the challenges of a volatile crude price environment and with significant efforts underway to manage to a lower cost structure and capital spend rate.”
The company recently saw an unusual increase in trading in which investors purchased 28,333 Put options on the company, a 130% increase compared to the daily volume of 12,320 Put options.
Gabelli owns 62,803 shares of OXY, valued at $6.03 million, which consists of 0.032% of his overall portfolio and 0.01% of the company’s shares outstanding.
OXY has continued to increase its dividend since 1986, with the most recent paid on January 15 at $0.72 a share. This is a 12.5% increase from last year, in which shareholders were paid $0.64 a share. The current annual rate is $2.88 per share.The current dividend yield is 3.52% and the five-year growth rate is 18.80%.
As shown in the chart above, the company's earnings per share have been steadily increasing over the past 10 years, meaning the dividend is more likely to be sustainable. The current payout ratio is 39% and P/E ratio is 10.91, which is close to the 2-year low of 10.35.
According to reports from last fall, the Board had authorized the repurchase of 60 million shares of the company's common stock, which was funded from available cash from operations, excess cash on hand and proceeds from asset sales. The Board also approved for shareholders to receive 0.4 shares of California Resources common stock for every one share of Occidental common stock held until November 17, 2014, which was the record date for distribution.
To find dividend growth stocks in other guru portfolios, click here to set your own parameters in the All-In-One Screener feature.
