Why Devon Energy Stock Slumped 21% in the First Half of 2023
Share of Devon Energy (NYSE: DVN) hugely underperformed the broader market in the first half of 2023, falling 21.4% according to data provided by S&P Global Market Intelligence. The S&P 500 index, meanwhile, gained 15.9%.
Investors in the oil stock were a happy lot in 2022, when the company's cash flows and dividends surged upward due to high crude oil prices. That started to change from the fourth quarter onwards, and the stock's appeal faded as its dividends fell. That said, this offbeat oil stock can still pay massive dividends to shareholders once oil prices start to recover.
Devon Energy is one of the largest producers of oil and natural gas in the U.S. Like most upstream energy companies, Devon pays a dividend. But unlike many companies, it does not attempt to keep those payouts fairly steady or gradually rising. Instead, it uses a fixed-plus-variable dividend framework: It sets a fixed base dividend for each year that is firm, and on top of that pays out a variable dividend each quarter amounting to up to 50% of the excess cash flow remaining from the period after funding the fixed dividend.
Source Fool.com
