SU - Energy Stocks Are Going To Become The Ultimate Dividend Payers
- At today's oil price, energy stocks will generate a lot of free cash flow, and we think they will become the ultimate dividend payers.
- We are seeing energy companies generate mid to low 30% free cash flow yields at $70/bbl WTI.
- Companies are likely to pursue a quasi strategy of buying back shares and paying a base dividend. Excess cash at year-end will be paid out via the form of special dividend.
- We believe almost all energy companies will be pursuing this route once debt levels go down to manageable levels or zero in some instances.
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Energy Stocks Are Going To Become The Ultimate Dividend Payers