U.S. energy firm Apache Corporation (APA) increased its quarterly cash dividend payment by 18% to 20 cents per share, up from the last payout of 17 cents per share. The new dividend will be paid on May 22, 2013, to shareholders of record on Apr 22, 2013.
If the newly announced dividend is maintained for a year, the annualized dividend payout of the company will be 80 cents per share.
Based on the closing price of $84.18 as on Feb 12, 2013, the proposed dividend affirms a yield of around 1%. Apache has a long and consistent dividend paying record, dating back to 1965. A steady dividend payout facilitates the long-term strategy of the company to provide attractive risk-adjusted returns to its stockholders.
The dividend hike reflects continued strong performance by the company, backed by good financial position and solid capacity to generate cash flows for its shareholders. We believe that the company will be able to generate sufficient revenue in the coming years, which will likely be backed by strong operating performances and good management decisions.
Founded in 1954, Houston, Texas-based Apache is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids.
Apache is noted for growing through acquisitions and the development of existing reserves. Its long-term production growth visibility improved significantly following the recent BP Plc (BP) asset acquisition, the purchase of a portion of Devon Energy Corporation’s (DVN) Gulf of Mexico assets and the deal to acquire Mariner Energy. These new acreage positions further complement the company’s diversified asset base.
However, the company’s long-term production and reserve growth primarily depend on its acquire-and-exploit model. Apache may find it difficult to complete accretive transactions in the future, which could negatively impact its growth rate.
Apache which is scheduled to report its fourth-quarter and full year 2012 results before the opening bell tomorrow, Feb 14, 2013, currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
In the energy exploration and production space, Cabot Oil & Gas Corporation (COG) displays better fundamentals and currently sports a Zacks Rank #1 (Strong Buy).
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