Our analysis is based on comparing Imperial Oil Ltd. with the following peers – Cenovus Energy Inc., Suncor Energy Inc., Canadian Natural Resources Limited, Exxon Mobil Corporation, Royal Dutch Shell Plc Sponsored ADR Class A, Athabasca Oil Corporation, Pembina Pipeline Corporation and Oil company LUKOIL PJSC Sponsored ADR (CVE-US, SU-US, CNQ-US, XOM-US, RDS.A-US, ATH-CA, PBA-US and LUKOY-US).
Imperial Oil Ltd.’s dividend yield is 1.55 percent and its dividend payout is 25.50 percent. This compares to a peer average dividend yield of 3.25 percent and a payout level of 59.69 percent. This relatively lagging dividend performance could spur some dividend action going forward – as long as the company’s relatively strong dividend quality score of 67 out of a possible score of 100 looks sustainable.
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2017), IMO-US paid a high quality dividend, which represents a yield of 1.51% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 1 was high quality and 4 were low quality.
- The ending cash balance, with a dividend coverage of 1.66x, provides a moderate cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to September 30, 2017), IMO-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 4.70x), investing cash flow (coverage of 2.07x), issuance cash flow (coverage of -4.62x) and twelve-month prior cash (coverage of 0.47x), for a total dividend coverage of 2.66x.
IMO-US’s issuance cash flow includes outflows from net debt repayment (coverage of -3.92x) and net share buybacks (coverage of -0.75x). Thus, the total coverage including share buybacks is 3.41x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||1.09||1.05||1.09||1.28||1.26||1.55|
|Dividend Payout (%)||10.86||14.76||11.69||40.91||23.14||25.5|
A complete list of metrics and analysis is available on the company page.
Imperial Oil Ltd. is an integrated oil company, which engages in the exploration, production and sale of crude oil and natural gas in Canada. It also petroleum refiner, producer and marketer of petroleum products. The company operates its business through following segments: Upstream, Downstream and Chemical. The Upstream segment includes the exploration and production of crude oil, natural gas, synthetic oil and bitumen. The Downstream segment operations consist of the transportation and refining of crude oil, blending of refined products and the distribution and marketing of those products. The Chemical segment is organized and operates to manufacture and marketing of various petrochemicals. Imperial Oil was founded on September 8, 1880 and is headquartered in Calgary, Canada.
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