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– Are Shareholder Payments Expected to Decrease Further? What Will Be the Impact on Dividend Yield? Find Out the Answers to These Questions and More About Investors’ Financial Returns.
Despite this, the oil company’s management clarified that if the capital expenditure (capex) targets are not met, the projects will be postponed, not canceled. Therefore, shareholders should not assume that unspent resources will automatically be distributed as dividends.
However, institutions like Goldman Sachs are already considering a higher amount (yet to be defined), driven by extraordinary dividends, but also taking into account the projection that free cash flow will likely be significantly higher than estimated in the Strategic Plan.
From the beginning, Morgan Stanley experts have emphasized that Petrobras has a history of investing less than the budgeted amount, indicating that the same pattern is likely to continue in the coming years. Based on this, the investment bank projects an effective disbursement of around US$ 80 billion over the next five years, with an amount of US$ 14 to US$ 15 billion in 2024.
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The rise in oil prices could ensure an extra revenue of R$ 100 billion for the Federal Government, indicates a recent economic study.
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Naturgy begins an investment of R$ 1.6 million to expand the gas network in Niterói and benefit thousands of new residences and businesses.
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A major turn in the Justice system suspends tax increases and directly impacts oil and gas companies in Brazil by affecting costs, contracts, and financial planning, leaving uncertain what could happen to the sector if these costs had increased.
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Brava Energia begins drilling in Papa-Terra and Atlanta and could change the game by reducing costs in oil while increasing production and strengthening competitiveness in the offshore market.
With reduced investment, can the company allocate more resources to dividends?
Dividend Yield Forecast for 2024
The equation that calculates dividends indicates a yield of approximately 10% in the next year, surpassing the average of global competitors. This forecast confirms the statement by Petrobras’ CFO, Sergio Caetano Leite, that the company is still distributing dividends at levels higher than the leading companies in the sector. “We are great payers,” Leite said.
The management, however, stated that the choice to make unplanned payments outside the dividend guideline will be analyzed based on indicators such as short-term projections, cash levels, and financial situation. If all three are favorable, then extraordinary dividends will be considered.
These payments do not follow a linear pattern and vary annually, which optimizes the calculation of projected dividend yield.
As a result, profit payment forecasts have been adjusted to a range of US$ 40 to 45 billion for the period, compared to the previous range of US$ 65 to 70 billion. This already takes into account the new dividend policy and the higher investments.
In addition to the base remuneration of US$ 40 to 45 billion over the next five years, the company is also considering the possibility of extra profit payments, with amounts estimated between US$ 5 to 10 billion.
Petrobras Dividends from 2024 to 2028
Is the fear among investors betting on Petrobras dividends next year justified? Here are answers to four common questions about the effects of the company’s new Strategic Plan.
Despite the reduction in cash inflow expectations due to divestments, Petrobras’ forecast for operational cash generation has increased to US$ 180 to 207 billion for the period from 2024 to 2028, compared to the previous range of US$ 170 to 190 billion. This increase is primarily driven by higher oil production and higher assumptions about Brent oil prices, as analyzed by Rodrigo Almeida and Eduardo Muniz from Santander. **These numbers indicate a positive outlook in terms of dividends for Petrobras shareholders in the coming years.**
According to the rule approved in August, the percentage of distribution from next year will be 45% of the company’s free cash flow, no longer the previous 60%. With higher investments, the amount available for dividends would tend to reduce even more.
According to analysts from JP Morgan in a report, “The biggest losers of this new plan seem to be the shareholders and not the creditors.”
The new concern comes after a year already marked by a slower pace of payments. According to data from the Meu Dividendo platform released in October (before the latest payments), Petrobras and Vale accounted for a 31% drop in total payments since the beginning of the year. Additionally, the dividend cut made by Petrobras this year was the largest in the world, according to a survey by the Janus Henderson manager. **The reduction in dividend payments has significantly impacted investors.**
The announcement represents a 30.7% increase compared to the current business plan, which totals US$ 78 billion (R$ 382.7 billion) for the period from 2023 to 2027.
With higher capital expenditures, investors prioritizing the dividend strategy are preparing for a period of reduced payments, concerned about the intensified impact expected from the new dividend policy.
New Strategic Plan from Petrobras
The state-owned Petrobras (PETR3; PETR4) announced a new Strategic Plan last week, which dispelled uncertainties regarding its future investments. This created the impression that the situation is not ideal but could be worse. However, the news also left investors worried about the possibility of an even greater reduction in dividend distribution.
From 2024 to 2028, the company plans to invest US$ 102 billion, representing a 30.7% increase compared to the plan currently in effect. These investments will be primarily directed towards Exploration and Production (71.5%), with an emphasis on pre-salt, as well as renewable energy and decarbonization (11.2%).
Source: InfoMoney
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