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What are we looking for?

Sustainable dividends from integrated oil and gas leaders.

The screen

Canada’s Imperial Oil Ltd. hit a historic high this week, spurred by unseasonably warm weather and an early start to the peak driving season.

Still, many investors wonder about the staying power of today’s hugely profitable oil and gas stocks like Imperial – and if their current elevated dividend rates are sustainable.

The long-term push to sharply cut oil and gas use – including through renewable power generation and electric vehicles – will continue.

Still, the International Energy Agency expects oil demand to keep rising to a maximum level of 102 million barrels of oil a day by the late 2020s.

Regardless, integrated oil and gas firms are better positioned for success than pure producers. That’s because their refining and chemical businesses benefit from lower crude and natural gas prices. That lends stability in period of falling prices.

Our search started with global integrated oil stocks. From there, we singled out those dividend payers with strong production and cash flow forecasts, before applying our TSI Dividend Sustainability Rating System, which awards points based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five.
  • Two points if it has raised the payment in the past five years.
  • One point for management’s commitment to dividends.
  • One point for operating in non-cyclical industries.
  • One point for limited exposure to foreign currency rates and freedom from political interference.
  • Two points for a strong balance sheet, including manageable debt and adequate cash.
  • Two points for a long-term record of positive earnings and cash flow to cover dividends.
  • One point if the company is an industry leader.

Companies with 10 to 12 points have the most-secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; four to six points, average sustainability; one to three points, below average sustainability.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Oil companies with dividends

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Bil.)**1Y Ttl. Rtn. (%) Recent Price ($)**
1Suncor Energy Inc. SU-TAbove Average84.660.89.747.91
2BP PLC (ADR)BP-NAbove Average84.6103.8-1.737.32
3Chevron Corp.CVX-NAbove Average84.2282.1-2.8153.89
4Shell PLC (ADR)SHEL-NAbove Average84.1210.411.165.71
5Exxon Mobil Corp.XOM-NAbove Average83.5429.83.0109.53
6Imperial Oil Ltd.IMO-TAbove Average82.747.835.890.38

Source: Dividend Advisor.

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

**Share price and market cap are in native currency.

Our TSI Dividend Sustainability Rating System generated six stocks: Canadian oil and gas majors Imperial Oil Ltd. IMO-T and rival Suncor Energy Inc. SU-T, both headquartered in Calgary, generate production from oil sands, as well as conventional wells, for sale and to feed their own refining operations. California-based Chevron Corp. CVX-N and Texas-based Exxon Mobil Corp. XOM-N both continue to use their strong cash flow to increase their dividends, as well as their share buybacks. Finally, BP PLC BP-N and Shell PLC SHEL-N, both based in London, remain two of the world’s biggest oil and gas producers.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/05/24 4:00pm EDT.

SymbolName% changeLast
Suncor Energy Inc
Chevron Corp
Royal Dutch Shell Plc ADR
Exxon Mobil Corp
Imperial Oil

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