Pioneer Natural Resources (PXD)

The next high-yield dividend stock we’re looking at is Pioneer Natural Resources. This firm is based in Irving, Texas, and like Chesapeake, it’s a hydrocarbon exploration and production company. Pioneer operates in the West Texas Permian basin, the world’s second-largest oilfield. Pioneer is a major asset holder in the region, and is a pure-play Permian producer.

During the third quarter of 2022, the last for which financial results have been released, Pioneer produced an average or 656,582 barrels of oil equivalent (BOE) per day. This was down slightly year-over-year, by 2.8% from 3Q21, but was still enough to generate over $6.09 billion in revenue, for a top-line gain of 36.5% y/y. Pioneer’s high revenue supported $2 billion in net income attributable to common shareholders, or $7.93 per share. In non-GAAP terms, these income numbers came to $1.9 billion, or $7.48 per diluted share. The non-GAAP EPS was up 81% from 3Q21.

Pioneer’s cash flow from operations in 3Q22 was $3 billion, and the company’s free cash flow was $1.7 billion. The company’s strong cash flows gave management confidence to continue its share repurchase program and dividend payments; during the quarter, the company bought back $500 million worth of shares, and declared a total dividend (base plus variable) of $5.71 per common share. The dividend was paid out on December 15.

At its current rate, the combined dividend payment annualizes to $22.84 and gives a yield of 10%. This is approximately 5x the average dividend yield found among S&P-listed companies.

All of this caught the attention of Mizuho’s Kumar, who laid out a bullish take on the stock. He writes, “We believe management will execute on its strategy of bringing forward value by focusing on higher-return inventory – a luxury they can afford in our opinion given their long runway of projects… This should refocus investors on the strong cash return program that is complemented by one of the largest reserve bases in U.S. shale…”

As indicated by his stance, Kumar rates PDX a Buy, while his price target, at $294, implies a one-year gain of 28%.

Overall, PDX stock has 16 recent analyst reviews, with a breakdown of 7 Buys, 8 Holds, and 1 Sell giving a Moderate Buy consensus rating. The average price target of $285.27 suggests 24% upside potential on the 12-month horizon.