Market Overview

Anadarko Slashes Dividend, Shares Halted Before Potential Move Down

Related APC
Benzinga's M&A Chatter for Thursday, October 27, 2016
Fast Money Traders Share Their Picks In The Energy Sector
WSJ: Sanchez might team with Blackstone to buy Anadarko Petro assets (Seeking Alpha)
Related COP
15 Must Watch Stocks for October 27, 2016
Earnings Scheduled For October 27, 2016
ConocoPhillips (COP) Q3 2016 Results - Earnings Call Transcript (Seeking Alpha)

Anadarko Petroleum Corporation (NYSE: APC) trading halted mid-afternoon Tuesday ahead of a reduced dividends announcement.

Following, a string of strong hints from executives earlier this year, the dividend cut is not surprising.

The cut comes amid plunging oil prices and a subsequent yield increase. CEO Al Walker commented during the February 2 earnings conference call, "If we look at the yield associated with our common stock at 3 percent, that's historically high for us." He added, suggesting news to come, "So, we look forward to discussing that with our board."

Additionally, CFO Bob Gwin is quoted in Seeking Alpha having said, "There are other things we could do with that cash in the current environment."

Related Link: Mike hkouw Sees Unusual Options Activity In Anadarko

On The Street

Prior to this announcement, Anadarko had an average rating of 1.89 from the Street, with 12 analysts recommending the stock at Buy, 17 rating it at outperform and five at Hold.

The Chop

According to Reuters, Anadarko's dividend costs the company approximately $550 million annually.

The latest update from the company indicates that the quarterly dividend has been cut from $0.27 to $0.05 per share. Subsequently, the yield has been reduced from 2.7 to 0.5 percent.

In conjunction with the announcement, Anadarko CEO Al Walker was quoted as saying the action will provide an additional $450 million, in cash, for financial flexibility.

Anadarko Isn't Alone

Other stocks have recently experienced the "dividend trim" lately as well in the falling oil price environment.

According to Yahoo Finance and Keith Bliss of Cuttone & Co, "Goldman Sachs says at least 20 companies tied to the oil patch have cut their dividends over the past three months."

Some of these energy sector names that have been swept up by the dividend cutting wave include Kinder Morgan Inc (NYSE: KMI) with a 74 percent dividend cut last December and ConocoPhillips (NYSE: COP) with a recent 70 percent cut.

However, amid these cuts, one alternative Wall Street recently might have predicted will not see dividend cuts is Rio Tinto (NYSE: RIO). According to an earlier Benzinga post, "Rio Tinto is expected to maintain its final dividend of 119c per share implying an increase in the company's full year dividend to 226.5c per share."

Anadarko opened Tuesday at $38.90, fell dramatically midday, and as of 3:40 p.m. EST, is down over 5 percent on the day at $37.87.

Posted-In: Al WalkerAnalyst Color News Dividends Dividends Commodities Markets Trading Ideas


Related Articles (APC + COP)

View Comments and Join the Discussion!