Against the Odds: How Schlumberger Keeps Delivering
Schlumberger’s dividend and dividend yield
Schlumberger (SLB) increased its dividend from 2009 through 2015. In 2015, SLB’s DPS (dividend per share) increased by 25% to $2.00 compared to the $1.60 per share dividend in 2014. Although Schlumberger’ net income declined, the strong dividend reflects the management’s confidence in the company’s balance sheet and growth prospect. By comparison, SLB’s industry peer Diamond Offshore Drilling (DO) discontinued its quarterly dividend in February 2016. Schlumberger makes up 0.53% of the SPDR S&P 500 ETF (SPY).
The company’s dividend yield expressed as DPS relative to share price was generally on a rise between 2013 and 2015. From 2013 to 2015, SLB’s share price declined 23%, while its DPS increased by 60%. SLB’s dividend yield increased from 1.4% as of December 31, 2013, to 2.7% as of March 8, 2016.
How much has Schlumberger returned to shareholders?
In 2015, SLB generated free cash flow of about $5 billion. From this, it returned $4.6 billion of cash to its shareholders through $2.4 billion in dividend payments and $2.2 billion worth of stock buybacks. In January, SLB announced plans to repurchase $10 billion shares. This will go into effect once the ongoing share repurchase program gets completed.
Schlumberger’s Chief Executive Officer, Paal Kibsgaard, stated in the company’s 4Q15 conference call that because “we review dividends annually…we are not increasing dividends this year” adding that “for the coming year, it’s going to be a balancing of the opportunities we’ve on M&A and the opportunities we have to buyback our stock.”
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