These Prominent Oil Shares Generously Disburse Wealth to Their Investors, Anticipating Further Monetary Benefits to Be Distributed to Shareholders in 2025 and Beyond
These Prominent Oil Shares Generously Disburse Wealth to Their Investors, Anticipating Further Monetary Benefits to Be Distributed to Shareholders in 2025 and Beyond
Oil prices have fluctuated significantly this year. West Texas Intermediate, the major U.S. oil price benchmark, has swung between the mid-$80s and the mid-$60s. Despite this wide range, it's a profitable zone for most producers.
Numerous oil companies are generating more cash than they need, enabling them to shower their shareholders with an increasing amount of money. Let's explore some oil stocks showering cash onto their investors.
Returning $9 billion in 2024, and potentially more in 2025
ConocoPhillips (COP -1.44%) is a cash-spewing juggernaut. The oil company pumped out over $4.7 billion in operational cash flow in the third quarter alone, easily covering the $2.9 billion required to sustain and expand its business. This allowed the company to distribute $2.1 billion in cash to its shareholders through share repurchases and dividends throughout the period.
ConocoPhillips is on track to return $9 billion in cash this year. It might send even more cash to investors next year. It boasts a stashing-rich piggy bank, with $7.1 billion in cash and short-term investments, and another $1 billion in long-term investments. It's also on track to wrap up its highly beneficial acquisition of Marathon Oil this year. The company now anticipates the deal to significantly surpass the annual cost savings of more than $500 million it initially predicted to attain.
ConocoPhillips has already jacked up its dividend by 34% this year. It intends to deliver dividend growth in the top 25% of companies in the S&P 500 in the future. In addition, it plans to ramp up its share repurchase rate from its present annual rate of around $5 billion to $7 billion next year, and buy back over $20 billion of its stock within the first three years of closing the Marathon deal. The blend of income growth and repurchases could give ConocoPhillips the ammunition to churn out impressive total returns in the coming years.
Buying back its cheap-as-chips stock
Devon Energy (DVN -3.81%) is also a cash-prolific spinner, mostly of which it's returning to its shareholders. The company produced $1.7 billion of operational cash flow in the third quarter and $786 million of free cash flow after capital expenditures. Devon returned $431 million to investors through dividends and share repurchases.
The company has "leaned in harder on our share repurchase program," as per CEO Rick Muncrief on the third-quarter call. It opted against variable dividends, believing "reinvesting in our company at today's prices is the best thing to do for shareholders." Devon trades at a free cash flow yield of 9% at $70 oil, which compares to a low-single-digit yield for the broader market.
Devon plans to carry on returning cash to its investors in the coming quarters. Much like ConocoPhillips, it will benefit from a highly beneficial acquisition, having recently closed its Grayson Mills Energy deal. It's targeting to return up to 70% of its free cash flow to investors, with the near-term emphasis on paying its regular quarterly dividend and repurchasing shares.
CFO Jeff Ritenour stated on the call, "We expect share repurchases in the range of $200 million to $300 million each quarter." It bought back shares at $295 million, the top end of that range, in the third quarter and has repurchased $3 billion since launching its current authorization, retiring close to 7.5% of its outstanding shares. Given its current valuation, those future repurchases will also be highly beneficial.
Given the current profitable situation of oil companies, many are utilizing their excess cash to reward shareholders. ConocoPhillips, for instance, is projected to return over $9 billion in cash to investors this year, with potential for more in 2025.
In the same vein, Devon Energy is returning a significant portion of its cash flow to shareholders. The company plans to return up to 70% of its free cash flow, with a focus on share repurchases and maintaining its quarterly dividend.