Oil and gas exploration and production company Devon Energy's (NYSE: DVN) trailing dividend yield of 7.2% is eye-catching, as is its potential to pay substantive dividends in the coming years. Still, is it enough to make the stock a buy? Here's what you need to know before buying the stock.
There's no point ignoring the elephant in the room. Devon Energy is a stock that will suit energy bulls, but if you are pessimistic about the price of oil, read no further! After all, Devon's dividend is tied to the price of oil.
Devon operates a "fixed plus variable" dividend strategy, with the current fixed portion set at $0.20 a quarter or $0.80 a year. Based on the current price, the fixed part of the dividend alone is yielding 1.9%. That said, even the fixed dividend somewhat relies on energy prices.
Source Fool.com