Marathon Oil (NYSE:MRO) Is Due To Pay A Dividend Of $0.11

The board of Marathon Oil Corporation (NYSE:MRO) has announced that it will pay a dividend on the 10th of June, with investors receiving $0.11 per share. The dividend yield is 1.6% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for Marathon Oil

Marathon Oil's Dividend Is Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Marathon Oil was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 29.7%. If the dividend continues on this path, the payout ratio could be 11% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was $0.76 in 2014, and the most recent fiscal year payment was $0.44. Doing the maths, this is a decline of about 5.3% per year. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. We are encouraged to see that Marathon Oil has grown earnings per share at 16% per year over the past five years. Marathon Oil definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Marathon Oil Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 5 warning signs for Marathon Oil you should be aware of, and 1 of them is a bit unpleasant. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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