Clarifications on Ecopetrol’s Upcoming 2024 Dividends

Colombian oil major Ecopetrol (EC)announced 4th quarter, 2023 earnings late last month. The company also announced their dividend distribution proposal for payment to shareholders in 2024. The Ecopetrol dividend 2024 dividend will be lower than last year’s dividend. The profits in 4Q were down 38% as oil prices declined according to a new report by Reuters.

From the report:

Colombia’s majority state-owned oil company Ecopetrol (ECO.CN), opens new tab on Thursday reported a fourth-quarter net profit that fell 38%from a year earlier, to just over $1.07 billion, with executives citing lower oil prices for the dip.

Net profit slid to 4.23 trillion pesos, from 6.85 trillion in the final quarter of 2022.

“The fact that we had a reduction in market price of $17 per barrel impacted net profit,” said CEO Ricardo Roa at a press conference after the release of results.

Roa said the company would hold to its previously announced plan to invest between 23 trillion and 27 trillion pesos, up to $6.8 billion, this year.

“The investment plan for 2024 plans to maintain the historic levels of execution that we reached in 2023, with an emphasis in the energy transition,” Roa said.

Source: Colombia’s Ecopetrol Q4 profit down 38% as oil prices drop, Reuters

Ecopetrol announced its plan to pay the following dividend amounts this year:

Ecopetrol Dividend 2024:

Total ordinary dividend payable per share – 278 COP

Total extraordinary dividend payable per share – 34 COP

Total dividend payable312 COP

Note: COP is Colombian Pesos

The payout proposal as above matches the firm’s policy of 60% payout ratio.

1.So how much an Ecopetrol ADR shareholder will receive in dividends?

One ADR = 20 Ordinary Shares. Hence each ADR will be paid 312×20 = 6240 COP or US $1.60 based on the current exchange rate. The actual rate received will vary based on the exchange rate on the date of payment.

2.What is the dividend yield then?

The dividend yield based on Friday’s closing price of $10.52 and a dividend amount of $1.59 is 15.11%.

3a.When will this dividend be paid?

The full dividend amount will NOT be paid in one shot. Instead it will paid in 3 equal installments on April 25, September 26 and December 19, 2024.

Update (3/25/24): Ecopetrol 2024 Dividend Payout Dates

Instead it will be paid in two equal installments as per the press release published after the annual shareholders meeting last Friday. The dividends will be paid on April 3, 2024 and June 26, 2024. So on those 2 dates a dividend amount of $0.80 each will be paid.

Source: Distribution of Dividends corresponding to Fiscal Year 2023, Yahoo Finance

3b.So what are the Ex-Dividend Dates in 2024?

The Ex-Dividend dates for dividend payments in 2024 is NOT confirmed yet. It will most likely be known next week when the results of the annual shareholders meeting is published.

4.Is this dividend lower or higher than in 2023?

This payment is indeed much lower than the amount paid in 2023 of $2.81 per ADR. However this year’s payment is still not bad since the yield comes to over 15% approximately and it included a special payout as well.

5.Is there any dividend withholding amount involved?

Yes. The exact amount or percentage will be determined at the time of payment. Last year it was negligible at 0.0005%

6. Is this dividend confirmed?

Yes the board of directors has already approved the above distribution proposal. Shareholders will be presented the plan on the general meeting on the 22nd for approval.

7.Is the current share price attractive?

That depends on an investor. While in the short-term the price may decline further, it is good for the long-term investor. The dividend payment cannot be beat and moreover should oil prices rise again the firm’s earnings would soar.

8.Is Ecopetrol a consistent dividend payer?

Absolutely. The company has paid a dividend every year since going public in the US in 2009. Though the amount varied each year based on oil prices and other factors, the company has never ignored shareholder by suspending dividends.

Update (3/30/24):

9.What is the Dividend Withholding Tax Rate for the 2024 Dividends?

0%. There will be no dividend withholding taxes charged for the dividend payments in 2024.

Disclosure: Long EC

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