Occidental Petroleum (OXY) just raised its quarterly dividend by 9% to $0.24 per share last week. This comes at a tough time for oil companies, with Brent crude (QAK25) sitting near $72 per barrel and WTI (CLJ25) near $68.
President Donald Trump’s new tariffs could complicate oil supply and demand. With tariffs on Canada and Mexico set to go into effect on March 4, oil companies like Occidental have reason to be concerned about their supply chains. Plus, the EIA thinks Brent crude will average $74 per barrel in 2025 before falling to $66 in 2026, which spell tough times for oil producers.
With this backdrop, how should investors take the dividend hike. And is Occidental stock a buy, sell, or hold now?
Occidental Petroleum Stock: A Health Check
Occidental Petroleum (OXY) is engaged in oil and gas exploration and production in the United States and Middle East. The company recently raised its dividend by 9% to $0.24 per share, for an annual payout of $0.96 per share.
This gives investors a 1.98% yield at current prices. Shares are down nearly 20% over the past 52 weeks and down just under 2% for the year to date. Investors might then be wondering about the choice to increase its dividend payout while struggling with its share price performance.
The confidence makes sense when you look at Occidental’s fourth-quarter 2024 results. OXY generated $3.6 billion in cash from operations and $1.4 billion in free cash flow. The company reported $1.8 billion in capital spending.
OXY also reported progress in its work to reduce overall debt, hitting a target of repaying $4.5 billion. This debt cleanup gives Occidental Petroleum more room to reward shareholders with things like dividend increases.
One worry is that Occidental reported a net loss of $297 million in the fourth quarter, or $0.32 per share. Its adjusted net income was $792 million.
Occidental’s Strategic Moves and Growth Engines
The company just agreed to sell $1.2 billion worth of assets, including some properties in the Rockies and parts of the Permian Basin that remain undeveloped. These sales are one way for the company to pay off debt coming due this year. This continues the company’s debt reduction plan.
Warren Buffett seems to like what he sees. His Berkshire Hathaway (BRK.B) added to his stake in the fourth quarter, now holding nearly 30% of the company.
Also noteworthy for investors is that Occidental is making big moves in carbon capture technology. Its main project, called Stratos, is nearing completion and will pull up to 500,000 metric tons of CO2 from the air each year once it is operating.
All these moves show Occidental’s two-pronged approach to both improve its traditional oil and gas business while building and scaling a new business in clean energy.
What Do Analysts Think About OXY Stock?
Analysts are muted on OXY stock despite its recent dividend hike. Occidental has a consensus “Hold” rating from the 25 analysts in coverage. It is worth noting that just one month ago, it had a “Moderate Buy” rating so sentiment has weakened. The average price target of $60.08 implies nearly 25% upside potential.
With a range in price targets from $45 to $81, it is clear analysts diverge in their expectations for OXY stock. Fitch Ratings recently upgraded its outlook on Occidental to “Positive,” but Goldman Sachs lowered its price target from $54 to $45 back in January 2025. Analysts worry that with stagnant or falling crude prices, it will be hard for Occidental to grow its profits.
Conclusion
So, should you buy, sell, or hold Occidental Petroleum after its 9% dividend hike? For most investors, holding is the sensible play right now. The dividend boost shows that management is still confident in its financials, but OXY’s debt challenges and mixed analyst outlook suggest caution.
Unless you need immediate dividend income or can’t stomach energy sector volatility, patience with OXY will likely serve you best.
