Devon Energy's Fixed and Variable Dividend Provides an Attractive 3.92% Dividend Yield

Mark Hake

This is not financial advice and you should not rely on my analysis to buy or sell any stock or cryptocurrency. I am not undertaking to induce you to buy or sell any securities. I am relying on the “publisher’s exclusion” in the Investment Advisers Act of 1940 to provide this information without any personalized or individualized investment advice.

Devon Energy, a Midwest oil and gas producer, released its Q2 earnings on Aug. 1, showing that oil production reached an all-time high.

However, the company had to lower its dividend to 49 cents per quarter from 72 cents the prior quarter.

Nevertheless, its dividend yield is still very attractive. At $50.00 today, DVN stock trades with an annualized yield of 3.92% (i.e., $1.96/$50.00).

Fixed and Variable Dividend

Investors can feel more secure that this dividend may be more sustainable. This is because the company's free cash flow, which funds the dividend, looks to be more secure.

For example, the quarterly dividend is split between a fixed component and a variable portion. The variable dividend is from 50% of the adjusted excess free cash flow, after fixed dividend payments, generated during the quarter.

For example, this quarter Devon paid 20 cents in a fixed dividend and 29 cents in a variable dividend, for a total of 49 cents.

The variable dividend was calculated after deducting 50% of the excess free cash flow generated from oil and gas cash flows.

The company's CEO said this was the 12th consecutive quarter that Devon had made positive FCF. Moreover, Devon Energy spent $228 million on share buybacks.

That means that total shareholder returns were $690 million, or 2.1% quarterly or 8.4% annualized, compared to its $32 billion market capitalization.

In other words, shareholder returns should approach at least 8.0% annually, given its dividends and buybacks. That makes DVN stock attractive to value investors in the long run.


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Mark R. Hake, CFA, writes articles on national and local news, stocks, and market events at,,, and as well as TalkMarkets.

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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ

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