Occidental Petroleum(NYSE: OXY) is one of the largest oil and gas producers in the world.
So, how many shares do you need to own to generate $1,000 in dividend income? In the simplest terms, someone would need to own 1,137 shares of Occidental stock.
Each share of Occidental pays $0.22 in dividends each quarter, which totals $0.88 per share annually. That means a person who owns 100 shares will receive $88 in dividend payments. In order to calculate the shares needed to reach $1,000 in dividend payments, simply divide 1,000 by 0.88. That works out to 1,136.36 shares.
To take things one step further, as of this writing, a person would need to invest $58,705 worth of Occidental shares to generate $1,000 in dividend income.
That's because Occidental's dividend yield (its annual dividend divided by its current share price) is 1.7%.
However, beyond all this math, there's a bigger question for investors: What's the future hold for Occidental's dividend payment?
Could Occidental increase its dividend payment?
First of all, Occidental's dividend payment is modest. The company uses only 21% of its profits to pay its dividend.
That's important, because high payout ratios (those above 75%) are often a warning sign of an unsustainable dividend that is likely going tobe reduced or cut altogether.
That said, the company has a significant debt load that may take priority over raising its dividend. Occidental has nearly $21 billion in debt and less than $2 billion in cash. Moreover, the company's free cash flow has been decreasing since the start of 2023.
In summary, given the company's overall position, Occidental doesn't look poised to significantly increase its dividend in the near future.
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Jake Lerch has no position in any of the stocks mentioned. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
