Pioneer Natural Resources Leads S&P 500 For Dividend Yield Thanks To Zero Hedges

Building Benjamins
2.19K Followers

Summary

  • 11% expected Dividend Yield based on second quarter run rate, strong balance sheet with low debt-to-EBITDA of 0.1x.
  • Boasts the highest yield in S&P 500 with a 25% increase in base dividend yield to $3.12 annually per share and a variable dividend yield based 80% payout ratio of free cash.
  • Strong focus on free cash generation by maximizing margins and prudently deploying capex (Capital Expenditures).
  • Sector low cash costs coupled with sector high realized price so far in 2022 results in the highest gross margins.
  • Goal is to "produce the lowest cost barrels with the highest margins and lowest emissions."

Pumpjack (oil derrick) and refinery plant in West Texas

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Investment Thesis

Pioneer Natural Resources (PXD) is the largest Midland Basin (Texas) oil and gas firm, paying out 80% of free cash as a variable dividend. PXD maintains a stock of over twenty years' worth of high return inventory, amounting to a nearly debt-free balance

This article was written by

Building Benjamins
2.19K Followers
BuildingBenjamins is a free stock picking and market commentary investment newsletter. Building Benjamins is the DBA (doing businesses as) publishing entity for Tradition Investment Management, LLC, a registered investment adviser. Benjamin Halliburton, our founder, also founded Tradition Capital Management in 2000 and was named “PSN Manager of the Decade” for All-Cap in the 2000s and “PSN Manager of the Decade” for Dividend Value in the 2010s. Since starting his investment career at Merrill Lynch in 1986, Ben has been continuously involved in investing. He managed money while earning a Master of Business Administration (MBA) with a focus on finance from Duke’s Fuqua School of Business in 1990, where he was distinguished as a Fuqua Scholar. In 1994, he earned the Chartered Financial Analyst designation. He was the top-performing portfolio manager at his firm, Brundage, Story and Rose, where his “Disciplined Growth Strategy” outperformed the S&P500 in the 1990’s bull market. Ben was the youngest partner at his firm and was called “the best investor I have ever met” by one of the senior managing partners.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of PXD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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