During the last 4 quarters, Brazilian oil firm Petróleo Brasileiro (NYSE: PBR), also referred to as Petrobras, paid out dividends equaling $3.79 per share. With its inventory worth simply over $11, that comes out to a yield of 34%.
Can Petrobras shareholders count on the same payout in 2023?
Beneath regular circumstances, maybe.
In 2021, free money circulate was $32 billion. Petrobras hasn’t reported fourth quarter 2022 outcomes but. When it does, free money circulate for the complete yr is projected to come back in at $31.5 billion, slightly below the earlier yr’s degree.
For 2023, nevertheless, free money circulate is predicted to be down drastically – falling all the way in which to $13 billion, as newly elected President Luiz Inácio Lula da Silva has ordered the corporate to extend capital expenditures.
The projected $13 billion in free money circulate in 2023 wouldn’t come near overlaying 2022’s $22 billion estimated dividends paid.
Petrobras doesn’t have a very good observe report with regards to paying shareholders dividends. It eradicated the dividend in 2014 and didn’t pay one once more till 2018.
Petrobras’ largest shareholder is the Brazilian authorities. Because of this, the dividend has turn into the plaything of latest presidents.
Final yr, then-President Jair Bolsonaro wanted extra funds for the Treasury, so he ordered Petrobras to pay extra dividends, which it did.
Now President Lula is demanding the other – that the corporate spend extra on capital expenditures, decreasing costs and lowering the dividend.
Wall Road predicts dividends paid will drop by about two-thirds, which continues to be sufficient for a double-digit yield.
However when your largest shareholder is the federal authorities and the president says, “Leap,” your CEO says, “How excessive?”
Or on this case, when the president says, “Minimize,” the proper reply is, “How low?”
Petrobras will nonetheless generate loads of money circulate and pay shareholders a wholesome dividend, however it will likely be nowhere near the artificially inflated dividend of the previous yr.
Petrobras’ dividend will probably be decrease in 2023.
Dividend Security Ranking: F
If in case you have a inventory whose dividend security you’d like me to investigate, go away the ticker within the feedback part.
Don’t overlook to verify to see whether or not I’ve written about your favourite inventory not too long ago. Click on on the phrase “Search” on the higher proper a part of the web page, kind within the firm title and hit enter.