https://finance.yahoo.com/news/chevron-sent-record-7-7-094200506.html
Chevron richly rewards its shareholders.
9 replies (most recent on top)
Im a shareholder - Thank you Chevron Management for looking after my interests. That why I hold shares
@1rwk,
Chevrons WACC is 8.3% so it is not cash neutral to borrow to buyback shares.
Just think how much they could have returned were it not for the $10+. Billion over run at FGP and $15+ billion at Gorgon.
For each share outstanding you have to pay out at the moment 4.15% dividend each year. So if you can borrow money at about that rate then it’s net cash neutral while competing with other share buyers so increasing the share price.
Noble and PDCE were effectively all bought with share dilution and their P/E ratio was higher than Chevrons so you have to buy out those shares to prevent going backwards on the key financials.
To employees:
We're going to make major cuts, because we can't afford you.
To investors:
We found a source to cut into and commit to giving you more money thru dividend increases and company stock purchase.
But this is not the bad times and we cant cover our dividend / buybacks out of free cash.
@uzg+1vmvJ41S Chevron has very low borrowing costs (excellent credit rating). The company can borrow in the bad times and pay it off in the good times.
Feels like a bit ponzi scheme-ish.
Serious question - how does it make sense to take on debt for cash distributions?