SM Energy (SM) Falls 2% Despite Increasing Quarterly Dividend
On Dec 28, 2023, SM Energy Company (SM) declared a 20% increase in its quarterly dividend payments, with increased dividend payout beginning in the first quarter of 2024. Despite the dividend hike, the oil exploration and production firm has experienced a 2.1% decline since the announcement of the news, attributed to the extreme volatility in crude oil prices. Additionally, the company's lower dividend yield compared to peers may have disappointed investors.
The U.S.-based upstream energy company has announced that it will pay an increased dividend of 18 cents per share (72 cents annualized) on Feb 5, to stockholders of record as of the close of business on Jan 19.
The new dividend represents a yield of 1.6%. While an increase in dividends is indeed a positive sign, the current dividend yield of SM Energy lags behind the 2.2% yield of the composite stocks belonging to the industry.
An increased dividend signals the company’s strong focus on returning capital to shareholders, which is being backed by handsome upstream operations comprising a high-quality asset base and robust balance sheet. In the third quarter of 2023, the exploration and production player returned $17.8 million to shareholders in dividends.
Zacks Rank and Other Key Picks
On Dec 28, 2023, SM Energy Company SM declared a 20% increase in its quarterly dividend payments, with increased dividend payout beginning in the first quarter of 2024. Despite the dividend hike, the oil exploration and production firm has experienced a 2.1% decline since the announcement of the news, attributed to the extreme volatility in crude oil prices. Additionally, the company's lower dividend yield compared to peers may have disappointed investors.
The U.S.-based upstream energy company has announced that it will pay an increased dividend of 18 cents per share (72 cents annualized) on Feb 5, to stockholders of record as of the close of business on Jan 19.
The new dividend represents a yield of 1.6%. While an increase in dividends is indeed a positive sign, the current dividend yield of SM Energy lags behind the 2.2% yield of the composite stocks belonging to the industry.
An increased dividend signals the company’s strong focus on returning capital to shareholders, which is being backed by handsome upstream operations comprising a high-quality asset base and robust balance sheet. In the third quarter of 2023, the exploration and production player returned $17.8 million to shareholders in dividends.
Zacks Rank and Key Picks
SM Energy currently carries a Zacks Rank #4 (Sell).
Investors interested in the energy sector may want to look at some better-ranked stocks like Sunoco LP SUN, The Williams Companies, Inc. WMB and Western Midstream Partners, LP WES. Sunoco LP (SUN) sports a Zacks Rank #1 (Strong Buy), while Western Midstream Partners and The Williams Companies each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco LP is one of the largest independent distributors of motor fuels to customers across the United States. SUN has projected its EBITDA to be in the range of $975 million to $1 billion in 2024, to be achieved through robust operational performance. Sunoco’s current dividend yield is 5.7% annually, which tops the 3.3% yield of the composite stocks belonging to the industry.
The Williams Companies is well-poised to capitalize on the mounting demand for clean energy since it engages in transporting, storing, gathering and processing natural gas and natural gas liquids.
With its pipeline networks spread across more than 30,000 miles, the company connects premium basins in the United States to the key market. WMB’s assets can meet 30% of the nation’s consumption of natural gas, which is utilized for heating purposes and clean-energy generation. Thus, the company will be generating stable fee-based revenues and has witnessed upward earnings estimate revisions for 2024 over the past 30 days.
Western Midstream Partners has a profitable portfolio of midstream assets. The midstream operator completed its acquisition of Meritage Midstream Services II, LLC in the Powder River Basin, making WES the largest gathering and processing operator in the region. WES shows a noticeable increase in total throughput for natural gas, crude oil and NGLs, and produced water propelled by new productions coming online and effective operational efficiency in the Delaware Basin.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
Sunoco LP (SUN) : Free Stock Analysis Report
SM Energy Company (SM) : Free Stock Analysis Report
Western Midstream Partners, LP (WES) : Free Stock Analysis Report
