Can Occidental Sustain and Increase its Dividend Amid Energy Cycles?

Core Insights - Occidental Petroleum Corporation (OXY) has made significant strides in improving its balance sheet and enhancing shareholder returns since acquiring Anadarko in 2019, reducing debt by $6.8 billion in the last 10 months, which has decreased annual interest expenses by $370 million and boosted net income [1][8] - The company has a strong free cash flow supported by low-cost, high-margin operations in the Permian Basin, which, along with contributions from international assets, allows for a dual focus on debt reduction and shareholder returns [2][8] - Occidental's diversified asset base, including its OxyChem segment and carbon capture initiatives, provides resilience and optionality to earnings, positioning the company as a potential player in the long-term energy transition [3][4] Financial Performance - In 2024, Occidental increased its dividend by 22%, reflecting management's commitment to sustainable and disciplined capital returns [2][8] - The company's operational efficiency and broad cash flow streams create a strong foundation for maintaining and gradually increasing dividends over time, despite exposure to commodity price fluctuations [4][8] - Occidental's earnings have consistently beaten estimates in the last four quarters, with an average surprise of 24.34% [7][9] Market Position - Occidental's return on invested capital (ROIC) stands at 6.26%, slightly below the industry average of 6.61% [9] - The company's stock has gained 8.4% over the last three months, outperforming the Zacks Oil and Gas-Integrated-United States industry's rise of 8% [11]