Petrobras: Reduced Payouts Remain Rich - Maintain Buy

Summary

• The market has over-reacted to Petrobras's supposedly lower FQ4'23 dividend payouts, since it is mostly attributed to one-time impairment and contractual charges.
• At the same time, readers must remember that its shareholder payout ratio has been revised down to 45%, inclusive of share repurchases and dividend payouts.
• PBR's payouts may remain rich, as it continues to record excellent spreads between the low break even point of $25 and the estimated Brent prices of $84.80 in 2025.
• Combined with its inherent undervaluation, PBR stock continues to offer an excellent dividend investment thesis for those comfortable with moderate volatility.

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We previously covered Petrobras (NYSE:PBR) in November 2023, discussing its mixed FQ3'23 earnings call, as the volatile spot prices and elevated expenses triggered its impacted profitability and dividend payouts.

We had also believed that FQ4'23 might bring forth some uncertainty, with

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.