- Whilst income investors often turn to the household oil and gas names like BP, other less known companies like PetroChina still offer investors a high 7% dividend yield.
- Despite the turmoil of 2020, their operating cash flow only decreased around a modest 11% year-on-year and improving operating conditions should help their dividend coverage in the future.
- They have a very healthy financial position with both very low leverage and very strong liquidity, although the latter comes about because they are a state-controlled company.
- This poses one big problem for foreign investors since it creates very high geopolitical risks, which have already seen their sister oil and gas company, CNOOC, delisted from the NYSE.
- Whilst their fundamentals are surprisingly solid, disappointingly there is too much geopolitical risk and thus I only believe that a neutral rating is appropriate.
For further details see:
PetroChina: A Surprisingly Solid 7% Yield Ruined By Too Much Geopolitical Risk