Occidental Petroleum: A Double-Digit Secured Yield With Future Growth Potential

On February 27, Occidental Petroleum's yield briefly jumped above 10% and there's no reason that that cannot continue going forward.
The company's hedging position means that its breakeven is at $40 / barrel. That supports the dividend and capital spending and its $10 / barrel below current prices.
Occidental Petroleum has significant potential and an impressive financial position from its assets. I expect the company will continue to reward shareholders well.
Occidental Petroleum (NYSE: OXY) has a market capitalization of less than $30 billion as Covid-19 fears have significantly punished the company. This has pushed the company’s yield towards 10%, a yield it briefly hit on February 27. As the market continues to worry, I wouldn’t be surprised to see it hit this yield again. However, as we’ll see throughout this article, a time of market worry can be an incredible opportunity to invest in a quality company.

Occidental Petroleum - Yahoo Finance
Occidental Petroleum 4Q 2019 Results
Occidental Petroleum’s recent 4Q 2019 results highlight a company progressive well on its merger plans. However, the market, spooked by Covid-19, ignored results while punishing share prices significantly.

Occidental Petroleum 4Q 2019 Highlights - Occidental Petroleum Investor Presentation
Occidental Petroleum closed $1.5 billion in asset divestitures in the quarter, a significant amount equivalent to ~5% of the company’s market capitalization. At the same time, the company continued to generate significant production, with 1.4 million barrels of production (exceeding the guidance midpoint by ~5%). From cash flow and asset divestitures, the company repaid $2 billion of debt.
For the full year, the company performed equally well. It repaid $7 billion of debt, announced $10.2 billion of divestitures, and had $1.2 billion in synergies. These are all significant numbers for a company with a market capitalization of $30 billion, and they... Read more

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