It’s raining dividends for Santos shareholders today
Last month, Santos handed in its first-half 2022 results. In doing so, the ASX 200 oil and gas business declared an unfranked interim dividend of 7.6 US cents. This is equivalent to ~10.93 cents in Aussie dollars.
Due to the absence of a dividend reinvestment plan (DRP), every investor will be receiving this dividend in cash.
Today’s 7.6 US cents per share payment represents a pleasing 38% increase from the 5.5 US cent interim dividend Santos declared in 2021.
This dividend hike was supported by record first-half free cash flow and underlying earnings.
In 1H22, Santos’ free cash flow rocketed by 199% to US$1.7 billion while underlying profit catapulted 300% to US$1.3 billion.
These results were underpinned by significantly higher oil and LNG prices due to strong global energy demand. Not to mention the contribution from the recent Oil Search merger.
Looking ahead, broker Macquarie is forecasting Santos to declare a bumper final dividend of 18 US cents. This would take total FY22 dividends to 25.6 US cents, representing a dividend yield of around 4.9%.
On the back of strong commodity prices, Santos shares have bucked the broader market weakness to push higher this year.
The Santos share price has jumped 22% in the year to date. It’s well and truly outperformed the S&P/ASX 200 Index (ASX: XJO), which has backpedalled 10%.
Through its merger with formerly ASX-listed Oil Search at the end of last year, Santos is comfortably the ASX’s second-largest energy business.
It currently commands a market capitalisation of $26 billion.
Despite Santos’ formidable size, it’s dwarfed by Woodside Energy Group Ltd (ASX: WDS) which has a market cap of around $62 billion.
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