Dividend.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
Devon Energy has taken the first position in the list as the oil giant is looking for its next acquisition target. Icahn Enterprises is second as the investment vehicle of Carl Icahn maintained its high dividend despite posting another quarterly loss. Coffee chain Starbucks is third as the company reported blowout results. The list is closed by pharmaceutical giant Pfizer.
Don’t forget to read our previous edition of trends here.
Devon Looking for Its Next Acquisition Target
Devon Energy (DVN) has taken the first position in the list, seeing its traffic increase 143%. Along with most energy stocks, Devon has seen its stock price rally over the past year or so as oil prices surged, leading to improved results.
It is no surprise the company is looking to put some of its cash and strong stock performance to work. Media reports have suggested the company is in preliminary discussions with Marathon Oil about a potential acquisition. A deal would certainly bring some synergies and help the oil firm increase its output in basins like the Permian, Anadarko, and Eagle Ford. Devon currently has a market cap of around $30 billion, two times higher than Marathon’s. A combined entity would generate annual revenues of around $26 billion at current oil prices.
Devon pays a variable dividend based on the amount of free cash generated within a set period. For the fourth quarter of 2023, Devon will pay 77 cents per share, higher than in each of the past two quarters. The annual dividend will be about 40% lower this year than last, but will yield a solid 6.2%.
Icahn Enterprises Keeps Dividend Intact Despite Losses
Icahn Enterprises (IEP) is second this week, with an advance in viewership of 52%. Icahn Enterprises, the publicly-listed vehicle of activist investor Carl Icahn, has reported another loss for the latest September quarter due to losses incurred in shorting its energy sector bets.
However, the investment holding company has not cut its $4 per year dividend, which yields an impressive 20%. The yield more than doubled after the stock plunged over 60% following allegations by a short seller that Icahn Enterprises employed a Ponzi-like structure to fund its dividend. Following the revelations, investors have become worried about the dividend’s sustainability. Their fears have not been helped by the company’s results, which have suffered continually due to Icahn’s poor-timed bets on a market selloff.
Amidst all these, short seller Hindenburg Research believes the dividend will be cut to zero, sooner or later.
Starbucks Posts Strong Results
Starbucks (SBUX) is third in the list with a rise in viewership of 47%. The coffee chain has again pleasantly surprised investors, with sales coming in above expectations. In the third quarter, revenue grew by 11.4% to $9.37 billion, while net income surged 39% to $1.22 billion.
However, Starbucks faced protests from workers demanding higher pay. The company has caved in and raised wages, a move that apparently has worked as same store sales continued to grow.
Starbucks shares have surged about 15% following the results, essentially erasing all losses for the year. On top of the strong performance, Starbucks pays a $2.28 per share dividend, amounting to a yield of 2.15%. The company has been increasing its dividend for 14 years straight.
Pfizer’s Results Continue to Deteriorate
Pfizer (PFE) has placed last in the list with an advance in traffic of about 30%. The pharmaceutical giant has reported its first quarterly loss in 2019, as demand for its COVID-19 products has been dwindling. Revenues from the company’s Cominarty vaccine plunged by 70%, while its COVID-19 treatment saw sales decline 97%.
The poor results have been reflected in the stock price. Shares in Pfizer have fallen 41% since the start of the year, as revenues have continued to decline. Year-over-year, revenues fell more than 40% in the third quarter.
Given the stock’s decline, Pfizer’s dividend now yields a strong 5.4%. But the company needs to find its next revenue driver to avoid cutting the payout.
The Bottom Line
Devon has been performing strongly and is now looking for an acquisition target, with reports suggesting it is in talks with Marathon Petroleum. Icahn Enterprises has reported another loss and its dividend is at risk. Starbucks reported a set of strong results, while Pfizer is struggling with falling sales of its COVID-19 products.
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