Petrobras Dividend: Market Fears Political Intervention, But Are Profits Really At Risk?

The board of directors of Petrobras (PETR4) approved this Monday (23) changes to the statute. Two topics covered in the proposal are sensitive to the most important characteristics of a company’s investment thesis: dividend payments and corporate governance.

Items that have become the focus of the debate on the proposed changes, which have yet to be submitted to the extraordinary general meeting (AGE), are the creation of a capital award reserve and the removal of certain restrictions on the appointment of directors, as described in the state law.

According to the statement, the remuneration reserve will ensure payouts to shareholders in the form of dividends, interest on shares (JCP) and even share buybacks. According to a preliminary assessment by analysts Andre Vidal and Helena Kelm of XP Investimentos This remuneration reserve will facilitate non-payment of dividends in excess of the minimum distribution policy.

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“This does not necessarily mean that there will be no extraordinary dividend payment for fiscal year 2023 (our baseline scenario assumes that it will be paid), it just makes it easier if this path is chosen,” Vidal and Kelm said in the report.

According to Vidal, until then there was a consensus in the market for an extraordinary dividend payment at the end of this year, 2023. Although XP supports this payout scenario in the analysis, the analyst says that with the new information, investors “will question the fundamentals of this investment with the possibility that extraordinary dividends will no longer be forthcoming”.


While analysts await more information on these changes, the scenario for Petrobras in 2023 is still seen as positive.

How are the dividends?

Since the beginning of the war between Israel and Hamas, the price of oil on the international market has risen by about 10% and amounted to slightly more than $90. In the first half of the year, the average price per barrel was $80.

“The Brent contract is still in a sideways position in the short to medium term. The fear is that the barrel will return to $100,” says Luan Alves, chief analyst at VG Research. Macroeconomic issues related to inflation and interest rates are causing concern. Regarding investments, Alves writes that “at the moment, we consider oil companies as a hedge.”

The analyst house expects Petrobras to post 95 billion reais in revenue at the end of 2023, while Levante expects it to reach 100 billion reais. nevertheless both hope that dividend yield year is 15%. Dividend yield is a measure of the trailing twelve-month dividend payout relative to the share price.

Bradesco BBI’s Vicente Falanga and Gustavo Sadko say it was only a matter of time before Petrobras built up its capital stock. “If this reserve had not been created, under Brazilian corporate law, Petrobras would have had to pay about 95% of its bottom line,” which would be unfeasible, according to analysts.


for them, the public company should follow the Vale reserve model (VALE3), in which the amount saved is “up to 50% of the final result, limited by paid-in capital”. The new information is expected to be published before the results of the fourth quarter of 2023, in February or March next year.

However, Falanga and Sadka say they see an opportunity for good payouts and extraordinary values ​​in 2023 and 2024. As long as Petrobras executes its capital spending program and maintains cash levels above optimal levels (which should be close to US$10 billion), there is room for extraordinary payouts, they said.

“Furthermore, from the perspective of the Ministry of Economy, Petrobras should maintain the highest level of dividends,” they wrote in the report. “Our sensitivity analysis shows that there is plenty of liquidity and plenty of room for extraordinary dividends.”

High profitability in 2023

Petrobras shares fell 6% on Monday (23) following the proposed changes to the bylaws. But the company’s investors had little to complain about in 2023.

According to the Association of Petrobras Engineers (Aepet), in the first half of the year Petrobras was the oil company that paid the most dividends to shareholders in the world. The volume of revenue distributed from January to June was 10.9 billion US dollars.


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Until October 20, 2023, before the disaster, it was assigned by a dividend yield 26.12% for shares of PETR4 for twelve months. That’s less than half the 68.3% recorded in 2022, according to Economatica, but earnings-enhancing profitability and appreciation will turn even more positive in 2023.

For the full year 2022, Petrobras’ earnings and preferred stock returned 47.23% to shareholders, with the stock ending the year with a loss of 13%.

In 2023, until October 20, the shares rose by 56.5%. In addition to the profit, the cumulative return this year was 94.39%, according to Economatica.

Stocks are rising this Tuesday morning.


Company Ticker Output Div 12 mo
(Div + JCP)
12 months
(shares + DIV and JCP)
Div Yield 2022
(Div + JCP)
2022 year
(shares + DIV and JCP)
Actions in 2022Return
accumulated 2023
(shares + DIV and JCP)
Shares accumulated 2023

Source: Economatica. Data up to October 20, 2023.

However, this priority in rewarding shareholders should change by the end of the year. In August, the policy of rewarding shareholders of the state company was changed. The new proposal says 45% of the company’s free cash flow will be distributed, rather than the previous 60%.

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