Implied dividend yield
Halliburton announced a Q3‑2025 dividend of $0.17 per share. Assuming the dividend will be paid each quarter, the annualized payout is $0.68 per share. With Halliburton’s current trading price hovering around $55 /share, the implied dividend yield is:
[
\text{Yield}=\frac{0.68}{55}\approx 1.2\%
]
Cost of equity
Using a standard CAPM framework:
- Risk‑free rate (10‑yr Treasury) ≈ 4.5 %
- Expected market risk premium ≈ 5.5 %
- Halliburton’s equity beta ≈ 1.3
[
\text{Cost of equity}=4.5\%+1.3\times5.5\% \approx 11.6\%
]
Trading implications
The dividend yield (≈ 1.2 %) is well below the company’s cost of equity (≈ 12 %). This gap indicates that the stock is not being used as a yield‑generating vehicle; investors are being compensated for risk primarily through capital appreciation rather than cash returns. Consequently:
- Dividend‑capture strategies are unattractive – the modest payout will not offset the equity‑holder risk premium.
- Focus on fundamentals and price action – with a low payout ratio, Halliburton can retain cash for reinvestment, debt reduction, or share‑buybacks, which could support price appreciation.
- Potential buying opportunity – if the market penalises the stock for its low yield, a modest pull‑back toward the $50‑$52 range could create a margin of safety for a long‑term, growth‑oriented position, especially given the company’s strong order‑book and exposure to cyclical energy demand.
In short, the dividend is a token gesture rather than a core return driver; traders should prioritize earnings momentum, macro‑energy trends, and any buy‑back announcements over dividend‑capture plays.