In early May, EOG Resources (EOG) declared a dividend of $0.17 per share, giving a projected yield of 0.7%, payable July 31, 2012. The $0.17 matches the dividend payable April 30, 2012, which was at an increased rate from the previous dividend of $0.16. EOG has steadily raised its dividend over the past five years, never failing to raise its dividend every four quarters, and sometimes sooner. Given this, and the company’s healthy balance sheet, I think it is likely that EOG will continue to raise its dividend regularly for the foreseeable future.
EOG’s dividend is also more consistent than that of its top U.S.-focused competitor Range Resources (RRC), which has a projected yield of 0.3%. Chesapeake Energy (CHK) has a projected yield of 2%, but I do not believe that Chesapeake’s dividend yield is sustainable, given the company’s current financial outlook. Devon Energy (DVN) is a stable competitor for EOG, and has a higher dividend, with a projected yield of 1.2%.
Continued Focus on Liquids for EOG
EOG aims to grow its oil and liquids production using methods identical to those that allowed it to become a player in natural gas. EOG built up its inventory since making the decision to diversify its production, and now, it faces the task of drilling on its resource base. EOG was better prepared for this switch than many other U.S. based small to mid-cap natural gas companies, and began its transition in 2007 with the North Dakota Bakken shale and the Forth Worth Barnett shale – a year before competitors Chesapeake and Kodiak Oil & Gas (KOG).To continue reading, click here.