Third, several of these companies have proven they are highly committed to consistently raising their dividends. For example, Exxon and Chevron are members of the S&P Dividend Aristocrats Index, which requires dividend increase streaks of at least 25 years for inclusion. [Visiting Dividend Aristocracy]
With its new dividend, Schlumberger’s payout has nearly doubled since 2008. Occidental’s dividend has more than doubled since 2010.
Still, even the thought of dividend cuts comes when energy stocks are vulnerable to negative earnings revisions and valuations that are high despite slumping oil prices. [Big Week for Big Energy ETFs]
“The forward 12-month P/E ratio for the S&P 500 now stands at 16.6, based on (last week’s0 closing price (2063.15) and forward 12-month EPS estimate ($124.04). Given the high values driving the “P” in the P/E ratio, how does this 16.6 P/E ratio compare to historical averages? What is driving the increase in the P/E ratio? The current forward 12-month P/E ratio of 16.6 is now well above the three most recent historical averages: 5-year (13.6), 10-year (14.1), and 15-year (16.1),” according to Rareview Macro founder Neil Azous.
Chart Courtesy: Bloomberg