6 Large-Cap Energy Stocks Offer Long Streaks of Dividend Hikes
By: Ned Piplovic,
While the current economic downturn and crashing oil prices devastated many energy equities, a few of the large-cap energy stocks with long streaks of dividend boosts might have the potential to deliver significant total returns over an extended time horizon.
Despite the availability of data and complex analytical models, many investors will find it difficult to cope with the level of volatility that markets are experiencing. Risk-averse investors will particularly struggle to keep their sanity amid alternating double-digit percentage share price swings between gains and losses.
Furthermore, long-term historical data is not very helpful for determining the best course of action in the short term. Therefore, investors who are working with a long-term horizon outlook might consider giving up on seeking gains in the immediate future and look for equities that performed well in the past and might do so again over an extended time frame in the future.
One of the best performance indicators is the record of steadily rising annual dividend distributions. Therefore, using the Dividend Screener tool available at DividendInvestor.com, we narrowed down the list below with just a few criteria. Because share prices for most equities in the energy sector have declined substantially over the past 30 days, we focused on criteria related to dividend distributions to identify the equities that could have future potential based on their past results.
To make sure that the chosen equities represent stable companies, the market capitalization had to exceed $10 billion. However, at $22.85 billion, the lowest market capitalization (Suncor Energy, Inc., NYSE:SU) ended up being more than twice the amount used as the selection criterion. The Exxon Mobil Corporation found itself on the top of the range with a $160 billion market capitalization. The unweighted average market capitalization of the six equities below exceeds $73 billion.
The only other requirement was that the equity had boosted its annual dividend distribution for at least the past 10 consecutive years. With 10 consecutive years, Suncor Energy had the shortest streak of annual dividend hikes. The other five equities offer between 17 and 37 years of consecutive annual boosts for an average of 20 consecutive annual dividend hikes.
Sorted by dividend yield in ascending order, below are the six large-cap energy stocks that have boosted their annual dividend payouts for at least 10 consecutive years.
6 Large-Cap Energy Stocks Offer Long Streaks of Dividend Hikes: #6
TC Energy Corporation (NYSE:TRP)
Headquartered in Calgary, Canada, and founded in 1951, the TC Energy Corporation operates as an energy infrastructure company in North America. The company announced that the Keystone XL pipeline project is finally going ahead after a decade-long delay, which should add significant capacity for oil transportation from Alberta to the refining facilities in U.S. Midwest.
TC Energy introduced dividend distributions in 1964 and has increased its annual payout amount over the past 17 consecutive years. The company tripled its annual dividend distribution amount since 2003, which corresponds to an average annual dividend growth rate of 6.7% each year. TC Energy’s 17th dividend boost increased the quarterly payout amount 8% from $0.53 (CA$0.75) to $0.57 (CA$0.81) for the upcoming pay date on April 30, 2020. The new payout is equivalent to a $2.29 (CA$3.24) annual dividend that yields 5.6%.
6 Large-Cap Energy Stocks Offer Long Streaks of Dividend Hikes: #5
Chevron Corporation (NYSE:CVX)
For its first dividend distribution in 2020, Chevron hiked its payout 8.4% from $1.19 throughout last year to the $1.29 quarterly distribution for 2020. This current quarterly amount corresponds to a $5.16 annual distribution and a 7.53% forward dividend yield. Driven higher by the share price decline, the current yield is nearly 63% higher than the company’s own 4.62% average yield over the past five years.
Tracing the beginning of its dividend distributions back to 1913, Chevron has delivered annual dividend boosts for the past 34 consecutive years. Just over the past two decades, the company enhanced its total annual dividend four-fold. This advancement pace is equivalent to a 7.1% average annual growth rate.
6 Large-Cap Energy Stocks Offer Long Streaks of Dividend Hikes: #4
Enbridge, Inc. (NYSE:ENB)
Enbridge — a Canadian crude oil and natural gas transportation company — has been distributing a portion of its earnings as dividend payouts for nearly seven decades. With its most recent boost for the first-quarter 2020 payout, the company extended its current streak of annual dividend hikes to 20 consecutive years. Over the past two decades, Enbridge enhanced its annual dividend amount 10-fold for an average annual growth rate of 12.2%.
The company increased its quarterly dividend from the current $0.52 (CA$0.738) distribution to the $0.57 (CA$0.81) current payout. This new quarterly amount corresponds to a $2.29 (CA$3.24) annualized distribution and an 8.43% forward dividend yield.
6 Large-Cap Energy Stocks Offer Long Streaks of Dividend Hikes: #3
Suncor Energy, Inc. (NYSE:SU)
Suncor Energy Inc. operates as an integrated energy company primarily in Canada’s Athabasca oil sand. The company began dividend distributions in 1992 and has boosted its annual payout amount 10 times since its most recent two-for-one stock split in 2008.
Over the past decade, the company enhanced its annual dividend distribution amount nearly five-fold. This advancement pace corresponds to an average dividend growth rate of 16.6% per year.
The current $0.33 (CA$0.465) dividend is more than 10% above the $0.30 (CA$0.42) payout from the last distribution in 2019. This new quarterly payout corresponds to a $1.32 (CA$1.86) annualized distribution and an 8.44% forward dividend yield.
6 Large-Cap Energy Stocks Offer Long Streaks of Dividend Hikes: #2
ExxonMobil Corporation (NYSE:XOM)
With a market capitalization of more than $160 billion, ExxonMobil is the largest company in this group. Additionally, paying its first dividend in 1882, ExxonMobil also has the longest history of dividend payouts with nearly 140 years of distributions. Furthermore, the company has enhanced its annual dividend payout amount every year for the past 36 consecutive years.
Just over the past two decades, Exxon Mobil enhanced its annualized dividend payout by nearly 300%. This level of advancement is equivalent to an average annual growth rate of 7.1% since 1999. The company’s current $0.87 quarterly dividend amount is 6.1% higher than the $0.82 distribution from the same period last year. This new payout converts to a $3.48 annualized payout and a 9.27% forward yield, which is nearly 90% higher than the company’s own 4.92% yield average over the last five years.
6 Large-Cap Energy Stocks Offer Long Streaks of Dividend Hikes: #1
Enterprise Products Partners L.P. (NYSE:EPD)
Founded in 1968, and based in Houston, Texas, Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, crude oil and refined oil products. The company initiated dividend distributions in the last quarter of 1998 and has boosted its annual payout every year since 2000. Over the past 20 years, Enterprise Products enhanced its total annual dividend payout 250%, which is equivalent to a 6.4% average annual growth rate.
The company’s current $0.45 payout is 2.7% above the $0.438 dividend distribution from the same period last year. The $1.80 annualized distribution corresponds to a 13.8% forward dividend yield. The share price decline pushed the yield more than 70% above EPD’s own 7.55% average yield over the last five years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.