In early 2021, Devon Energy (NYSE: DVN) launched the oil industry's first fixed-plus variable dividend framework. It paid a fixed base quarterly dividend that it routinely increased. In addition, Devon pays a variable dividend of up to 50% of its remaining excess cash flow.

Many oil companies used that blueprint to launch similar frameworks. With their free cash flow soaring along with oil prices, the industry paid a gusher of dividends. However, with oil prices cooling off in recent months, oil companies have less cash to return to shareholders. That's driving down dividend payments for companies like Devon. Meanwhile, several other oil companies are shifting their capital allocation priority from paying variable dividends to repurchasing shares.

Pioneer Natural Resources (NYSE: PXD) set its dividend bar higher than Devon Energy, aiming to pay out up to 75% of its total quarterly free cash flow via dividends. With its oil-fueled cash flows soaring last year, Pioneer Natural Resources paid a deluge of dividends. The oil company's total dividend outlay was over $25 per share, putting its dividend yield in the double digits.

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Source Fool.com