Is Devon Energy Stock a Buy?
Devon Energy (NYSE: DVN) is a $32 billion market cap energy producer with a focus on U.S. onshore drilling. The most notable feature of the stock, however, is probably the huge 9.2% dividend yield. If you are a dividend investor looking for energy exposure, that's likely to sound alluring. But don't buy Devon without a full understanding of its dividend policy. It won't likely be attractive to most income investors, but it might be just what some are looking for.
Devon Energy drills for and sells oil and natural gas. There are nuances to the business, but the big driver of top- and bottom-line performance is going to be energy prices. Even production levels, which are important and hitting all-time highs today and up and impressive 11% year over year, will likely be overshadowed by commodity prices, noting that oil and natural gas are prone to swift and dramatic price swings. That's just the way the energy sector works, and there's little that Devon or any other company can do about it. For example, even a low break-even production cost of around $40 a barrel and active hedging can soften the price swings, but it can't eliminate them.
Source Fool.com
