Ex-Dividend Date Ignites Demand for Marathon Oil, Refining Stocks

Energy

Published: November 17, 2020 10:10 am

Crude oil traded roughly flat on Monday, settling at $41.34 a barrel. Yet shares of Marathon Petroleum Co. (NYSE: MPC) and Marathon Oil Corp. (NYSE: MRO) both added more than 8% to their price for no apparent reason.

Marathon Oil, the exploration and production company, traded more than 34 million shares Monday (about 25% above its daily average), while Marathon Petroleum, the refining and marketing company, traded more than 15 million shares, double its daily average.

It’s a timing thing. Tuesday, November 17, is the ex-dividend date for both stocks. Shareholders of record as of Wednesday (the record date) will receive a $0.03 per share quarterly dividend ($0.12 annualized) payment for their Marathon Oil shares. Shareholders of record in Marathon Petroleum will receive a quarterly dividend payment of $0.58 per share ($2.32 annualized), a yield of 5.7% at Monday’s closing price. The annualized yield on Marathon Oil is 2.93%.

Shares of both will no longer trade at those dividend payout levels on Tuesday, and shares purchased on or after Tuesday aren’t guaranteed to receive similar payments.

Over the past five trading sessions, Marathon Petroleum stock has added about $4.00 per share (nearly 11%) and Marathon Oil shares have risen by $0.57 (about 11.6%). In both cases, gains in the stocks jumped on the final two trading days before the ex-dividend date.

In one sense, just move along, there’s nothing to see here. Marathon Oil shares traded down about 1.2% in Tuesday’s premarket while Marathon Petroleum’s stock traded essentially flat. There’s been no big change in the market for crude or for refined products. Both crude and refined products are trading within a dollar of their prices back in June. Nothing fundamental pumped up the two Marathon stocks on Monday. All the action was related to the pending dividend record date of November 18.

Marathon Oil shares traded at $5.25 on last look, down 3.7%, in a 52-week range of $3.02 to $14.07 and with a consensus 12-month price target of $6.52. The company’s $0.03 per share dividend was reinstated after being suspended earlier this year.

Marathon Petroleum traded at $38.95, down about 1.6% on Tuesday morning, in a 52-week range of $15.26 to $63.89. The price target on the stock is $43.73.

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