Occidental Petroleum: A Dividend Stock to Consider Now?

Occidental Petroleum Corporation (OXY) has been a popular choice among investors seeking dividend-paying stocks in the energy sector. With a dividend yield of 1.88% and a history of consistent payouts, OXY has attracted attention from income-oriented investors. However, the question remains: is Occidental Petroleum the best energy dividend stock to buy right now?



To answer this question, we must examine the key factors driving Occidental Petroleum's dividend growth and sustainability in the long term. One of the primary factors is the company's strong financial performance. Occidental Petroleum has a three-year median payout ratio of 6.0%, indicating that it reinvests a significant portion of its profits back into the business. This reinvestment strategy has contributed to the company's earnings growth, which is a crucial driver of dividend growth.

Another factor supporting Occidental Petroleum's dividend sustainability is its consistent dividend payout history. The company has paid dividends over a period of at least ten years, demonstrating its commitment to sharing profits with shareholders. Additionally, Occidental Petroleum has a stable dividend payout, with the last ex-dividend date being Dec 10, 2024.

Occidental Petroleum's dividend growth and sustainability are also supported by its debt reduction strategy. The company has been working to reduce its debt levels, which can improve its financial health and ability to sustain dividends. In 2024, Occidental Petroleum announced asset sales worth $970 million as part of its debt reduction efforts. These asset sales, along with other cost-cutting measures, have helped the company reduce its debt burden and improve its overall financial health.



However, Occidental Petroleum's dividend yield is lower than the average dividend yield of its peers in the energy sector. According to Slickcharts, the average dividend yield for the energy sector is around 3.5%. This lower yield may indicate that Occidental Petroleum is reinvesting a larger portion of its profits back into the company, which could lead to higher growth potential in the long run. However, investors who are looking for a higher income from their investments may want to consider other energy companies with higher dividend yields.

In conclusion, Occidental Petroleum's dividend growth and sustainability are supported by its strong financial performance, consistent dividend payout history, and debt reduction strategy. While the company's dividend yield is lower than the average for its peers, its reinvestment strategy and commitment to long-term growth make it an attractive option for investors seeking dividend-paying stocks in the energy sector. However, investors should carefully consider their individual financial goals and risk tolerance before making any investment decisions.