ADNOC Drilling, the largest national drilling company in the Middle East, has implemented a significant new policy designed to bolster shareholder returns. The company confirmed a progressive dividend policy, guaranteeing a minimum annual increase of 10% in dividends per share over the next five years (2024-2028).
This strategic move underscores ADNOC Drilling's commitment to delivering long-term value to its shareholders. The enhanced dividend policy coincides with the company's ambitious growth strategy, which leverages artificial intelligence, digitization, and advanced technologies to solidify its position in both domestic and international markets.
The new policy translates into a minimum distribution of $4. 8 billion to shareholders between 2024 and 2028. ADNOC Drilling has not ruled out the possibility of exceeding this threshold, with the Board of Directors retaining the discretion to approve additional dividends based on free cash flow generated by promising growth opportunities.
This enhanced shareholder return strategy comes on the heels of ADNOC's successful $935 million institutional placement of ADNOC Drilling shares in May 2024. This placement increased the company's free float to 16. 5%, attracting a wider range of investors and potentially paving the way for inclusion in the Morgan Stanley Capital International (MSCI) Emerging Market Index.
"The approval of this enhanced dividend policy reflects ADNOC Drilling's unwavering commitment to delivering increasing value to shareholders, " stated Abdulmunim Saif Al Kindy, ADNOC Upstream Executive Director and Vice Chairman of ADNOC Drilling. "This commitment is fueled by our multi-faceted growth strategy that embraces cutting-edge technologies. "
Al Kindy further highlighted the benefits for the recent influx of shareholders brought in by the share placement. "ADNOC's recent placement expands the investor base, ensuring a greater number of shareholders will reap the rewards of these enhanced returns, " he remarked.
Analysts suggest this move by ADNOC Drilling is likely to be met with enthusiasm from existing and potential investors. The guaranteed minimum dividend growth offers a level of predictability and stability for income-oriented investors, while the potential for additional distributions adds an exciting layer of upside potential.
The enhanced dividend policy positions ADNOC Drilling as an increasingly attractive investment proposition, solidifying its commitment to delivering value to shareholders while pursuing its ambitious growth trajectory.