Covered — strong second-quarter cash flow behind a steady base. A 2.51% yield on a 42.38% trailing payout is covered: $0.16 a quarter as a base dividend, declared August 5, 2026 and paid September 30, 2026. Second-quarter 2026 adjusted free cash flow was $751 million on $1,506 million of operating cash flow, with leverage at about 0.5x — the base dividend is a small claim on that quarter's cash, even after $1.05 billion of Delaware Basin acquisitions in the same quarter.
Key risk: Oil price and acquisition pace — Delaware Basin prices drive cash flow, and $1.05 billion of bolt-on acquisitions in the second quarter of 2026 shows capital competing with the dividend.
Changes if: The payout pushes well past 42.38%, free cash flow falls toward the quarterly base dividend total, or the $0.16 base rate is cut. Acquisition spending is the secondary watch.
- ✓Payout-coverage check: 42.38% of trailing earnings leaves more than half of earnings behind the dividend, and second-quarter free cash flow of $751 million covered the quarter's base dividend many times over.
- ✓Yield check: 2.51% indicated — $0.16/qtr × 4 at the $25.49 close on Oct. 23, 2026. Real base cash dividend, not a special or a return of capital.
- ✓Dividend growth check: Raised $0.01 in February 2026 to $0.16 a quarter and held there through September 2026 — a short growth record, but a step up, not a cut.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.