A top selling point of Saudi Aramco’s plan to offer as much as $12 billion in shares is the chance to reap one of the oil industry’s biggest dividends.
Investors who are willing to look past a steep valuation and the lack of buybacks would cash in on a $124 billion annual payout that Bloomberg Intelligence estimates will give the company a dividend yield of 6.6%. Most of these returns go to Aramco’s biggest shareholder, the Saudi government, which needs the funds to pay for a massive economic transformation plan.
The offering, one of the world’s biggest in recent years, will be a test of foreign investors’ interest after they mostly stayed away from the mega initial public offering in 2019.
“The stock hasn’t performed well recently but it’s a fantastic buy-and-hold position,” said Ryan Lemand, chief executive officer of Neovision Wealth Management. “It is a dividend payout play for institutional investors.”
