A Petrobras (PETR3;PETR4) is expected to announce a new policy on dividends between July and August this year, say analysts. The proceeds have been the target of criticism in the government Lula (PT), who believes that the state-owned company should prioritize the allocation of capital in investments.
The analyst of Empiricus Investimentos, Ruy Hungary, points out that, with management more interested in investing in refining, renewables, petrochemicals and other projects, the trend is for dividends to fall in 2023 and even more in the following years. Currently, the oil company distributes 60% of its profit to shareholders.
In a more pessimistic scenario, the Benndorf believes that the next policy should be close to the mandatory minimum dividend defined by law — 25% of payoutcut of up to 35% in relation to the current one.
The analyst of the house, Júlio Borba, sees that the scenario of the minimum dividend makes room for Petrobras to make extraordinary distributions, according to the investment perspectives and the government’s demand for revenue. O payout extra can reach 50%, in a more optimistic view, according to Borba.
already the USB BB expects the state-owned company to reduce its policy to 40% of free cash flow (FCF). This estimate would lead to a yield of 16% for 2023 and 13% for 2024, estimate Luiz Carvalho and the bank’s team.
What to expect from the shares?
Analysts say that any cut in Petrobras’ dividends would be negative for the stock, as they have been the main drivers of returns in recent years. However, a worsening of expectations is already incorporated in prices, they say.
Hungary, from Empiricus, comments that, “unless the dividend policy worsens much more than expected, the market has already reduced expectations well”.
Carvalho and UBS BB analysts also point out that the stock is already discounted, as European peers trade around 12% of distribution yields.
Is it still worth buying Petrobras?
UBS BB has a sell recommendation for Petrobras shares, with a target price of R$ 22. Carvalho and the bank’s analysts say that the risks for the thesis are linked precisely to the new dividend policy.
According to them, stocks should have negative reactions to lower percentages of payout or less visibility into payments.
Benndorf, in turn, downgraded the state-owned company’s assets to “neutral”, with a target of R$32. return is less attractive in the medium term.
“We prefer to wait for the next movements of the new management to define whether we have a more optimistic bias with the marry“, says Borba.
Empiricus, on the other hand, has a buy recommendation for Petrobras. The focus of the house is on dividends. “Even considering a worsening in capital allocation and dividend policy, the company should still deliver good yields for the shareholders”, says Hungary.
Source: Moneytimes
I am an author and journalist with a focus on market news. I have worked for a global news website for the past two years, writing articles on a range of topics relating to the stock market. My work has been published in international publications and I have delivered talks at both academic institutions and business conferences around the world.
