A strong shift in our portfolio to own the best stocks, funds and exchange-traded funds amid high-inflation continues this week with the addition of Devon Energy Corp. (DVN), explains Bryan Perry, growth and income expert and editor of Cash Machine.
The company is a premier oil and gas exploration and production company based out of Oklahoma City, Oklahoma. Devon is a key developer of crude oil and natural gas properties all located in the United States, operating 5,134 wells that are printing money for the company.
Devon has a market cap of around $46 billion and is ranked the 10th-largest oil and gas company in the United States. Devon pays a dividend yielding 7.27%, based on the most recent dividend payout of $1.27 per share. The company is one of the few big energy companies to pay out a variable dividend based on free cash flow.
Devon operates with a proprietary dividend approach. Its dividends consist of a combination of fixed dividends, currently at $0.16 per quarter, and performance-based variable dividend payments — which totaled $1.11 per share during the most recent quarter.
The variable dividend payment consists of up to 50% of surplus free cash flow. In the current environment, Devon generates massive free cash flows, utilizing deep reserves and not allocating huge capital outlays for new projects.
First-quarter results were excellent as the company posted earnings of $1.88 per share versus estimates of $1.76 per share on record free cash flow of $1.3 billion. Revenue of $3.8 billion was up 85% from the year earlier quarter.
The focus is on share appreciation and big dividend payouts, making for an excellent fit into our Accelerated Income Portfolio. With WTI crude trading at about $110/bbl. and natural gas up to $8.60/MMBtu., I look for Devon to further increase its dividend payout in the third quarter. The ex-dividend date for the current quarterly dividend of $1.27 per share is June 10. Buy Devon Energy Corp. under $75.
