The dividend is one of the loudest numbers in Karim Rahemtulla’s “Ultimate Stock Unicorn” pitch, and it is also the one most likely to mislead. The ad throws out “dividend growth of more than 20% through the last three years” in one place and a “1,000% dividend increase” in another, both of which sound like a company compounding its payout steadily. The reality is more mundane, and understanding why is a useful lesson in how to read any income-oriented energy pitch.
Oil and gas producers pay dividends for a specific reason. They are mature, capital-heavy businesses that generate a lot of cash when commodity prices cooperate, and returning a slice of that cash to shareholders is how they attract income investors. The catch is that the payout is only as stable as the oil price behind it. When crude collapsed in 2020, many producers cut their dividends sharply to preserve cash, and most of the “growth” stories that followed were really recovery stories.
The “1,000% increase” is a base-rate trick
Here is exactly what happened to the company behind this pitch. It slashed its dividend to essentially nothing during the 2020 oil-price crash, then rebuilt it over the next several years. A payout restored from a near-zero base can produce an almost arbitrarily large percentage gain without representing real growth. If you cut a dividend from 25 cents to a penny and then bring it back to 25 cents, the percentage increase from the low point looks enormous even though you have simply returned to where you started.
That is the “1,000% increase” in a nutshell. The current payout sits at 25 cents per quarter, which is the same level the company paid back in 2019. Calling that “20% dividend growth through the last three years” overstates what happened, because there was no three-year compounding trend. There was a cut, a rebuild, and a return to the prior level. The distinction matters, because an investor who buys an energy stock expecting steady, compounding dividend growth is buying a very different thing from one who understands the payout will rise and fall with the oil cycle.
What the yield actually is today
Set the promotional phrasing aside and the current numbers are worth looking at directly. The company now trades at roughly four to six times earnings and carries a dividend yield above 6%. Those are real, checkable figures that hold up at today’s price, and they are the honest version of the income story. A 6%-plus yield on a producer trading at a mid-single-digit earnings multiple is a defensible value proposition, independent of the “unicorn” framing.
The tradeoff is what that yield is compensating you for. A high yield on an energy stock is often the market’s way of saying it expects the commodity cycle to turn, or that the payout will be trimmed again if prices fall. Income investors should read that yield as a reward for taking on commodity and cyclical risk, not as a guaranteed fixed income. That is the honest way to weigh the opportunity, and it is a very different conversation from the one the ad copy invites.
For the full story on the company behind these claims, see our APA Corporation stock explainer, and for where it sits across the sector, our oil and gas stocks overview. The broader energy-sector context is covered in our energy stocks piece.
Energy income is not fixed income
There is a reason energy dividends carry higher yields than bonds or many other equities, and it is not that energy companies are unusually generous. A 6%-plus yield is the market pricing in risk: the risk that the commodity cycle turns, that earnings compress, and that the dividend gets trimmed again. An income investor coming from bonds or a savings account should read that yield as compensation for taking on cyclical risk, not as a guaranteed stream.
The comparison is worth making explicit. A Treasury bond promises a fixed coupon backed by the government, and the principal risk is mostly inflation. An energy dividend promises a payout that management can change at any time, and the company itself is exposed to a volatile commodity. The honest framing is that you are swapping a steady, low payment for a higher, variable one, and the higher yield is exactly what you are paid to accept that variability. For someone comfortable with that trade, the current numbers are genuinely attractive. For someone who needs the income to be stable, they are a poor substitute for fixed income. That does not make them a bad investment, just a different one, and knowing which you own is half the discipline.
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