This article presents an overview of the 5 Best Low-Priced Dividend Stocks To Invest In. For a detailed overview of such stocks, read our article, 13 Best Low-Priced Dividend Stocks To Invest In.
5. Petroleo Brasileiro ADR Reptg 2 Ord Shs (NYSE:PBR)
Number of Hedge Fund Investors: 36
Brazilian energy company Petroleo Brasileiro ADR Reptg 2 Ord Shs (NYSE:PBR) has a dividend yield of a whopping 19% as of December 16.
Petroleo Brasileiro ADR Reptg 2 Ord Shs (NYSE:PBR) recently said it plans to spend $102 billion before the end of 2028. About 72% of this spending will be allocated to oil and gas exploration.
In August Petroleo Brasileiro ADR Reptg 2 Ord Shs (NYSE:PBR) talked about its new policies regarding dividends:
Another important fact was we reviewed the shareholders’ remuneration policy.
In this policy review – we will maintain important aspects that will guarantee the financial soundness of the company, the control of that. We maintained the same periods, we continue with the same guides of indebtedness. We have a reference, we have our gross debt and how we pay out quarterly our dividends. And we’ve reformulated our formula going from 60% to 45% of free cash flow designated to dividend pay-out. This level is in line with the major worldwide enterprises. I am here considering independent enterprises and also state companies. Remuneration to shareholders, I would like to highlight the main dates that were already announced to the market here for the second quarter remuneration. The base data will be August 21. The first tranche will be paid of – the person will be paid November 21 and the second December 15.
We continue controlling our debt using capital principle that is part of the guidance of the company. And we continue committed to generate and to distribute value. Now our buyback program. Well, Petrobras is one of the companies that communicates most with the market in Brazil and abroad. These are the shares that are mostly traded abroad.
Read the entire earnings call transcript here.
Fairlight Capital made the following comment about Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) in its Q3 2023 investor letter:
“Throughout the year, we have reviewed thousands of companies, including many in the oil sector. While we are generally cautious about commodity-based businesses where the company lacks control over the price of what it produces, the valuations in several cases have reached extremely compelling levels. For example, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) and Ecopetrol (EC). Petrobras has distributed dividends of over $2.30 paid this year3 , while Ecopetrol has traded as cheaply as the $9-$10 range (close to our purchase price) and is paying approximately $2.50 in dividends this year.
We factor in the potential cost of FX movements over time, but even under the most pessimistic scenarios the investments should work out well. We initially came across these ideas while looking at South American stocks in general. We saw that many market commentators had expressed concerns that Ecopetrol’s dividends might be halted, especially following the election of Gustavo Petro as president of Colombia in June 2022. Similarly, there have been reservations about the sustainability of Petrobras’s dividend. However, the government owns substantial controlling stakes in these companies and is also a recipient of their dividends. For Ecopetrol, the Colombian government owes money to Ecopetrol due to the Fuel Price Stabilization Fund (FEPC). This fund aims to stabilize fuel prices for Colombian consumers. It bridges the gap between international and national Colombian consumer prices by compensating producers and importers for this price difference. The primary goal is to cushion the impact of global oil price fluctuations on the Colombian market. This is achieved either through cash payment or by forgoing dividend payments due from the government’s stake in these companies. In Ecopetrol’s case, the dividends paid (or those that would be paid to the government) are applied against the outstanding balances…” (Click here to read the full text)
