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Trending: Pioneer Natural Resources Ups Variable Dividend to Record High

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.

Pioneer Natural Resources has taken the first position in the list after the company raised its dividend to a record high. Second on the list is Walgreens Boots Alliance, which recently declared its regular dividend but might face some legal issues related to its contribution to the opioid crisis. Dow Chemical has taken third place after the company reported weak guidance. 3M closes the list, as the company also faces potential lawsuits.

Don’t forget to read our previous edition of trends here.

Pioneer Natural Resources

Pioneer Natural Resources (PXD) has trended first this fortnight, seeing its viewership climb 85%. Pioneer, a $50-billion oil and gas producer, has raised its variable dividend to a record high, thanks to improving results amid high oil prices.

Pioneer declared a quarterly base-plus-variable dividend of $8.57 per share, equaling a quarterly yield of 3.5% and going ex-dividend next Friday, September 2. In the first quarter, the company declared a dividend of $7.38 per share, more than double the dividend in the prior quarter. The company’s revenues jumped by 64% in the June quarter to $7 billion, while earnings per share surged 267% to $9.36.

Pioneer said it earned around $2.7 billion in free cash flow and is returning more than 95% of that amount to shareholders.

Shares in Pioneer are up more than 67% over the past 12 months and trade at a relatively low price-to-earnings ratio of 10. The low valuation suggests investors are skeptical the company will be able to continue with such strong cash generation, although the entire market has re-rated lower due to inflation and higher interest rates.

PXD

 
Source: Barchart.com

Walgreens Boots Alliance

Walgreens Boots Alliance (WBA) is second in the list with a rise in viewership of 26%, on par with Dow Inc. Walgreens has seen its stock underperform during the past 12 months, as the company faces declining sales and profitability due to competition from the online sector, including Amazon.

Adding to the worries, a federal judge ruled a few weeks ago that Walgreens contributed to the opioid crisis in San Francisco along with other pharmacies. The company said it was disappointed with the ruling and will appeal, but the most likely scenario is a settlement.

Walgreens’ results have continued to deteriorate in the latest quarter ended May 31, with sales down 4% to $32 billion and net income falling 76% to $289 million. The company’s stock has lost 23% of its value over the past 12 months.

Walgreens managed to slightly increase its quarterly dividend by 0.5% in July to a quarterly 48 cents per share. The annual rate increased from $1.91 per share to $1.92, equating to a yield of over 5%.

Walgreens’ stock seems undervalued, trading at a price-to-earnings ratio of just 6.

WBA 1

 
Source: Barchart.com

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Dow Inc

Dow Inc (DOW) has also taken the second spot in the list, with viewership up 26%. Dow has trended as the company reported a sour earnings outlook, saying it expects third-quarter net sales of between $14.3 billion and $14.8 billion. Analysts had expected sales to hit $14.7 billion.

Dow, which sells chemicals and materials for many industries including furniture, appliances, and automobiles, said demand was weakening due to inflation, especially in the energy sector, squeezing households.

Dow shares are down more than 4% since the start of the year and trade at a very low price-to-earnings ratio of just 6.10. The company declared earlier this month an unchanged quarterly dividend of 70 cents per share, payable on September 9 and going ex-dividend on Tuesday, August 30.

DOW

 
Source: Barchart.com

3M

3M (MMM) is last on the list, with a jump in traffic of 19%. 3M trended after the company announced a reorganization under which it will spin off its healthcare unit, a step aimed at improving performance.

3M’s separation of its healthcare unit, which comprises medical solutions, oral care, and health information, is expected to complete by the end of 2023. The company believes the separation will unlock shareholder value as the unit has been underperforming for years and dragged down the conglomerate’s overall performance.

3M shares have declined more than 20% since the start of the year. The company’s dividend was hiked at the beginning of 2022 and remains unchanged. The firm will pay a quarterly dividend of $1.49 per share, equating to a yield of 4.2%.

MMM

 
Source: Barchart.com

The Bottom Line

Pioneer Natural Resources has hiked its dividend to a record thanks to strong cash flow generation. Walgreens is facing legal challenges related to its contribution to the opioid crisis in San Francisco. Dow Chemical has reported a disappointing outlook due to inflation’s effect on demand. 3M is hoping the separation of the healthcare unit will lead to a re-rating of the stock.

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