You might be surprised at how many shares it takes to earn $1,000 in dividend income from owning Occidental Petroleum stock.
Occidental Petroleum (OXY 0.45%) is one of the world’s largest oil and gas producers.
So how many shares would you need to own to earn $1,000 in dividend income? At its simplest, someone would need to own 1,137 shares of Occidental stock.
Each Occidental stock pays a quarterly dividend of $0.22, for an annual total of $0.88 per share. In other words, someone who owns 100 shares will receive a dividend of $88. To calculate the number of shares needed to reach $1,000 in dividends, simply divide 1,000 by 0.88. This is 1,136.36 shares.
Taking it a step further, as of this writing, you would need to invest $58,705 worth of Occidental stock to earn $1,000 in dividend income.
That’s because Occidental’s dividend yield (annual dividend divided by current stock price) is 1.7%.
But beyond all this math, there are bigger questions for investors. The question is, what does the future hold for Occidental’s dividend payments?
Can Occidental increase its dividend?
First of all, Occidental’s dividend is modest. The company uses just 21% of its profits to pay dividends.
This is important. That’s because a high payout ratio (over 75%) is often a warning sign of an unsustainable dividend, which is likely to be cut or cut completely.
However, the company has a large amount of debt, which may take priority over increasing the dividend. Occidental has nearly $21 billion in debt and less than $2 billion in cash. Furthermore, the company’s free cash flow has been decreasing since the beginning of 2023.
In summary, considering the company’s overall position, Occidental doesn’t seem poised to increase its dividend significantly in the near future.
Jake Larch has no position in any stocks mentioned. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
