April 12, 2025 a 07:31 am
DVN: Dividend Analysis - Devon Energy Corporation
Devon Energy Corporation demonstrates a solid dividend profile, characterized by a long-standing dividend history of 33 years. Despite past volatility, the company's strategic focus on sustainability holds promise for future yield stability, effectively balancing capital returns with growth investments.
📊 Overview
The dividend profile of Devon Energy Corporation is robust, yet reflective of recent market challenges affecting the energy sector. The company's dividend yield stands at 3.62%, with a current dividend per share of $1.48. Devon's dividend payouts have been maintained continuously for the past 33 years, signifying trust and reliability, although with some historical fluctuations.
| Metric | Value |
|---|---|
| Sector | Energy |
| Dividend yield | 3.62 % |
| Current dividend per share | 1.48 USD |
| Dividend history | 33 years |
| Last cut or suspension | None |
📈 Dividend History
Devon's historical dividend policy highlights the company's commitment to shareholder returns, albeit with periodic adjustments typical in the cyclicality of the energy sector. Such a proficiency highlights management's foresight and adaptability in varying economic climates.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 0.24 |
| 2024 | 1.45 |
| 2023 | 2.87 |
| 2022 | 5.17 |
| 2021 | 1.97 |
📉 Dividend Growth
The recent analysis of dividend growth over the past five years shows a slow recovery phase with a 32.88% growth after previous declines, serving as a promising outlook for gradual improvement in shareholder returns. The 3-year figure reflects more recent operational changes.
| Time | Growth |
|---|---|
| 3 years | -9.71 % |
| 5 years | 32.88 % |
The average dividend growth is 32.88% over 5 years. This shows moderate but steady dividend growth.
✅ Payout Ratio
A balanced payout ratio presents Devon's strategic intentions of maintaining dividends while ensuring retained earnings bolster future growth. Current EPS-based payout ratio at 32.15% reflects sustainable and strategic dividend policies, whereas a negative free cash flow payout ratio suggests temporary operational challenges.
| Key figure | Ratio |
|---|---|
| EPS-based | 32.15 % |
| Free cash flow-based | -117.63 % |
The EPS payout ratio of 32.15% is healthy, ensuring capital for future growth. The negative FCF ratio is a short-term issue that needs to be addressed for long-term payout sustainability.
✅ Cashflow & Capital Efficiency
Efficient capital allocation ensures sustainability and growth. Devon's historical cash flow metrics illustrate challenges in free cash flow generation, impacted by high CAPEX, yet underscore opportunities for strategic improvements, boosting capital efficiency metrics over subsequent fiscal periods.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | -4.12 % | 8.97 % | 8.50 % |
| Earnings Yield | 13.98 % | 12.94 % | 15.02 % |
| CAPEX to Operating Cash Flow | 112.32 % | 60.31 % | 60.08 % |
| Stock-based Compensation to Revenue | 0.63 % | 0.61 % | 0.46 % |
| Free Cash Flow / Operating Cash Flow Ratio | -12.92 % | 39.68 % | 39.91 % |
The negative Free Cash Flow Yield suggests temporary inefficiencies, impacting cash retention post-CAPEX. Improvement measures could enhance operational cash use and strategic flexibility.
⚠️ Balance Sheet & Leverage Analysis
Devon's debt metrics indicate moderate leverage, positioning it with a tactical responsibility for maximized assets and minimized debt costs. Balance sheet strength translates into stability, with reasonable financial flexibility signified by key ratios being within manageable limits.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.63 | 0.54 | 0.60 |
| Debt-to-Assets | 0.30 | 0.26 | 0.28 |
| Debt-to-Capital | 0.39 | 0.35 | 0.37 |
| Net Debt to EBITDA | 1.20 | 0.74 | 0.51 |
| Current Ratio | 1.04 | 1.07 | 1.25 |
| Quick Ratio | 0.95 | 0.99 | 1.19 |
| Financial Leverage | 2.10 | 2.03 | 2.12 |
Current metrics suggest Devon's leverage management aligns with industry norms, utilizing debt to fuel growth initiatives while maintaining liquidity and managing financial risks prudently.
🗣️ Fundamental Strength & Profitability
Devon's profitability and fundamental metrics underpin its strategic leverage application in line with sector volatility. ROE, ROA, and robust margins depict sustained profitability amidst evolving operational conditions, promoting shareholder value creation.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity (ROE) | 0.20 | 0.31 | 0.54 |
| Return on Assets (ROA) | 0.09 | 0.15 | 0.25 |
| Margins: Net | 18.14 % | 24.75 % | 31.38 % |
| EBIT | 0.23 % | 0.32 % | 0.42 % |
| EBITDA | 43.71 % | 49.99 % | 54.16 % |
| Gross | 29.55 % | 34.35 % | 43.66 % |
| R&D to Revenue | 0 % | 0 % | 0 % |
Devon's profitability ratios consistently surpass industry standards, underscoring its operational efficiency and shareholder wealth potential driven by strategically aligned returns and margin management.
📉 Price Development
📈 Dividend Scoring System
| Criteria | Score (1-5) | Score Bar |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 4 | |
| Dividend Growth | 3 | |
| Payout ratio | 3 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 2 | |
| Balance Sheet Quality | 4 |
Total Score: 28/40
✅ Rating
Devon Energy Corporation's dividend profile is commendably reliable with a solid payout structure, though some operational enhancements can bolster free cash pressure resilience. A "Moderate Buy" recommendation is rationalized for dividend-focused investors seeking balanced, risk-conscious growth potential in the energy sector.