ADNOC Drilling's move to jack up dividend for 2024-28 could see other entities take the same path, according to market analysts. Image Credit: Supplied

Dubai: Shareholders in ADNOC Drilling Company have lots to cheer about, given that they will getting a minimum 10 per cent increase in yearly dividend per share until 2028. The general assembly has now formally voted in the proposal.  

The 'expected cumulative minimum yield' from the change in policy works out to more than 27 per cent, according to the ADNOC subsidairy.

In stark dollar terms, this would mean shareholders get to have a share of at least $4.8 billion during the 2024-28, 'demonstrating company’s commitment to delivering highly attractive shareholder returns'.

Not just that, the Board of Directors 'may approve' additional dividends over and above the new policy 'after considering free cash flow accretive growth opportunities'. (Dividends are expected to be paid semi-annually.)

Abdulmunim Saif Al Kindy, ADNOC Upstream Executive Director and Vice-Chairman of ADNOC Drilling, said: “ADNOC’s recent placement of an additional 5.5 per cent of ADNOC Drilling’s share capital means there is now a greater number of shareholders to benefit from these enhanced returns.”

16.5 %

Size of ADNOC Drilling's free float

In May, ADNOC completed a $935 million institutional placement of ADNOC Drilling shares. This represented 5.5 per cent of ADNOC Drilling’s total issued and outstanding share capital and increased the Company’s free float to 16.5 per cent.

ADNOC Drilling's stock price is trading at Dh4.03, while the 52-week high and low are at Dh4.6 and Dh3.45, respectively.

As for ADNOC's $935 million institutional placement, it was the 'largest ever accelerated book building' done in the MENA region to date. "The higher free float resulted in a higher weight in FTSE indices and is expected to provide a pathway towards inclusion in the Morgan Stanley Capital International (MSCI) Emerging Market Index," the company said in a statement.

The 'MSCI inclusion will contribute to the diversification of the company’s investor base and significantly broaden awareness of the unique value proposition'.

With a 10 per cent dividend hike to sweeten the deal...