Chris Lange
5 min read
Quick Read
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Diamondback Energy (FANG) raised its quarterly base dividend 7.3% to $1.18, yet the payout still consumes only 15% of Q3 free cash flow.
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Management built the base dividend to hold up with oil below $40 per barrel, far below EIA’s projected $79/b Brent price in 2027.
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Diamondback’s $13.4 billion debt keeps falling while oil production per share rose 7.5% YoY, strengthening the dividend’s long-term foundation.
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Diamondback Energy (NASDAQ:FANG) just raised its dividend for income investors. TradingView reports that the Permian Basin oil producer raised its quarterly base dividend by 7.3% to $1.18 per share. The previous payout was $1.10, paid in May and August. Annually, the dividend now comes to $4.72, up from $4.40. This article tracks base dividend coverage: how many times free cash flow covers the base dividend.
Why Coverage Beats Earnings for Retirees
Free cash flow is the money left after a driller pays to keep its existing wells producing and to drill new ones. Reported earnings can move on accounting items, such as the $182 million net derivative loss Diamondback booked in the third quarter. Coverage answers the question a retiree actually cares about: is real cash paying for the dividend, and how much buffer sits behind it?
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A Payout Covered Nearly Seven Times
In the third quarter, Diamondback produced $2.15 billion of free cash flow, up 33.5% YoY, and paid out $309 million in dividends. That covers the dividend about 7 times. At the new rate across 280.02 million shares, the quarterly bill comes to roughly $330 million. That is about 15% of third-quarter free cash flow, so coverage still sits near 6.5 times. Free cash flow per share rose 26% YoY. The reinvestment ratio, meaning the share of operating cash flow spent on drilling, was just 32%.
