Favoring companies that are the highest paying dividend stocks is one of the most useful rules-of-thumb in all of stock investing. But investors can achieve a higher risk-adjusted return if they study these special companies in a little more detail to determine if they are also the best dividend paying stocks. In this report, we will be doing that for Occidental Petroleum Corporation.
Occidental Petroleum Corporations (OXY) is firm that is engaged in oil and gas exploration and production. It does business in the United States, Latin America, North Africa, and the Middle East. OXY is headquartered in Houston, Texas, and is one of the largest U.S. oil and gas companies.
OXY has three segments. The oil and gas segment explores for and develops oil, natural gas, and natural gas liquids (NGL). The chemical segment manufactures and markets basic chemicals. The midstream and marketing segment gathers, processes, transports and stores, oil, condensate, natural gas, and NGL.
In many ways, OXY is a very good firm. Its balance sheet is not excessively levered. Operating cash flows have been consistently positive (even through the 2008 market meltdown and Great Recession that followed). And free cash flows have been mostly positive over this same time. Furthermore, it has raised its dividend every year since at least 2009; and it shows the wherewithal to do it again (its cash flow from operations currently covers its dividend payout by a factor of two. On top of all this, it has been shrinking its shares outstanding slightly. OXY seems to think that its stock price is too low.
However, we are still not high on OXY. On one of the most basic and important metrics, sales per share, OXY has turned in a very poor performance. Its sales per share ratio has actually declined over the previous business cycle (roughly 7 – 8 years). It scores unimpressively or poorly on most other measures of efficiency, and its growth outlook is clearly subpar. On top of all this, though it has a high dividend yield, on most other valuation metrics, OXY appears richly priced.
At best, we think we can describe OXY as a decent company that is simply overpriced. OXY is not a company we would consider one of the best dividend paying stocks we cover.
Stat Sheet – Occidental Petroleum 4/12/16
|Industry||Oil & Gas Integrated|
|Market Cap||$ 55,301|
|Growth Prospects||Below Average|
|Price Volatility||Below Average|
(Our assessment of this firm’s fundamentals will be in effect for the rest of calendar year 2016.)
If you would like to see the highest paying dividend stocks that we feel are also the top dividend paying stocks, click the link below.
Disclaimer – Information contained herein has been obtained from sources believed to be reliable. Neither the author nor the publisher guarantees the accuracy or completeness of the information and methods described. This information is offered as general commentary only. It is not intended as investment advice. Investment and trading of securities involves risk, including of loss of capital. Market conditions change over time, and no assurance can be given that a reader may apply the principles described to make a profit. The author and publisher expressly disclaim all and any liability to any person for any investment or trading decisions that the reader may make in reliance on this information.