Prior to Noble Energy Inc.’s (NBL) first quarter 2014 earnings release on Apr 24, 2014, its board of directors announced a roughly 29% hike in the quarterly dividend rate. The new quarterly dividend comes to 18 cents per share, up from the prior 14 cents per share. The dividend is payable on May 19, 2014 to shareholders of record at the close of business on May 5, 2014.
This brings the annualized dividend to 72 cents per share. The hike reflects the company’s confidence in its prime asset portfolio and its intention to share the benefits with its shareholders.
Noble Energy’s commitment to add to shareholder value is supported by a dividend raise in each of the last three years. In Apr 2013, the quarterly dividend was hiked by 12% from 12.5 cents after adjusting for a stock split.
The current increase doesn’t come as a surprise given the company’s sound financial position aided by strong operating cash flow of nearly $3 billion at year-end 2013. This will help fund Noble Energy’s increasing dividend payments. The company paid $198.0 million as dividends in 2013, up 20.7% from $164.0 million in 2012.
Going ahead, the company’s plan to expand its exploration activities to the Middle East and Africa will boost future growth opportunities. Noble Energy is already enjoying higher returns from its Tamar and Leviathan prospects in Eastern Mediterranean. This will continue to act as a major tailwind thanks to the natural gas hungry Israel market.
Moreover, the shale boom in the onshore reserve-rich basins of Denver/Julesburg (“DJ”) and Marcellus will continue to drive Noble Energy’s results.
Currently, Noble Energy carries a Zacks Rank #3 (Hold). Other better-ranked oil and gas stocks include Zacks Ranked #2 (Buy) Abraxas Petroleum Corp. (AXAS), EOG Resources Inc. (EOG) and RSP Permian, Inc. (RSPP).
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