Denver-based Cimarex Energy Co. (XEC) increased its quarterly common stock dividend by 16.7% to 14 cents per share (56 cents per share annualized). The new dividend will be paid on Jun 3, 2013 to shareholders of record as of May 15. This marks the fourth consecutive year of dividend increase by the company.
The dividend hike reflects continued strength in the company’s performance, backed by solid operating results and investments, and diligent execution of its strategic plans. We believe that the company will be able to generate sufficient cash flows for its shareholders in the coming years, backed by strong operating performances and good management decisions. Prior to this revision, in Feb 2012, the company had increased its quarterly dividend by 20.0%.
As of Dec 31, 2012, the company had $69.54 million in cash and cash equivalents and a debt of $750.0 million. Moreover, it has paid common stock dividends amounting to $10.4 million to shareholders during the fourth quarter of 2012.
We believe that the increase in dividend will boost investors’ confidence in the stock, thereby driving share value.
Cimarex is an independent oil and gas exploration and production (E&P) company. The primary activities of the company are in Mid-Continent and Permian Basin areas of the U.S.
As is the case with other independent exploration and production companies, Cimarex’s results are directly exposed to oil and gas prices, which are inherently volatile and subject to complex market forces.
The company currently carries a Zacks Rank #3 (Hold). But there are other E&P companies that are expected to perform well in the coming 1 to 3 months. These include Linn Co LLC (LNCO) with a Zacks Rank #1 (Strong Buy) as well as Hyperdynamics Corporation (HDY) and PDC Energy Inc. (PDCE) with Zacks Rank #2 (Buy).