Updated 3/6/25

Coterra Energy (NYSE: CTRA) is a mid-sized oil and gas producer that blends natural gas and crude oil operations. Born from the merger of Cabot Oil & Gas and Cimarex Energy, the company holds a diversified asset base, including low-cost natural gas production in the Marcellus Shale and valuable oil reserves in the Permian and Anadarko Basins.

For income investors, Coterra is unique in how it structures its dividends. Rather than a fixed payout that increases annually, the company uses a hybrid approach, offering a steady base dividend supplemented by variable payouts when cash flow allows. This makes it appealing for those looking to benefit from the ups and downs of the energy market but also introduces some unpredictability for those seeking consistent income. Let’s break down what investors need to know.

Key Dividend Metrics

💰 Forward Dividend Yield: 3.45%
📈 Trailing Dividend Yield: 3.29%
🕰 5-Year Average Dividend Yield: 4.33%
📊 Payout Ratio: 56%
📆 Next Dividend Date: March 27, 2025
⚠ Ex-Dividend Date: March 13, 2025

Dividend Overview

Coterra’s dividend structure is a little different from traditional oil and gas companies. It pays a base dividend, which is reliable, and then layers on additional variable payments depending on financial performance. The forward yield of 3.45% is decent, though it falls short of the company’s five-year average of 4.33%.

With a payout ratio of 56%, the company isn’t stretching itself too thin, and there is still room for reinvestment in growth projects. The combination of a strong cash position and disciplined capital spending makes the dividend fairly secure for now, though variable dividends will fluctuate along with commodity prices.

Dividend Growth and Safety

Coterra has maintained a steady dividend payout over time, but it does not follow the traditional model of predictable increases year after year. This can be a drawback for investors who prioritize income stability over total returns.

Factors supporting dividend safety

✔ The company generated $2.8 billion in operating cash flow over the last 12 months, which provides a strong foundation for ongoing payouts.
✔ With $2.04 billion in cash reserves, there is a buffer against downturns in oil and gas pricing.
✔ A conservative debt load, with a debt-to-equity ratio of just under 29%, gives it financial flexibility.

Risks to dividend stability

🚩 Revenue and earnings have seen year-over-year declines, which could affect dividend flexibility moving forward.
🚩 The variable portion of the dividend means payouts can shrink if commodity prices soften.

Chart Analysis

Price Action

Coterra Energy (CTRA) has been in a choppy trading range over the past year, experiencing multiple peaks and pullbacks. The stock recently hit a high near $30 before pulling back to its current level of $26.28. This decline has brought it closer to its 200-day moving average, currently around $25.51.

The 50-day moving average (orange line) is above the 200-day moving average (blue line), which typically indicates a bullish trend. However, the price has dropped below the 50-day moving average, which could signal short-term weakness. If the stock fails to hold around this level, further downside toward $25 or lower could be possible.

Moving Averages

The 50-day moving average has been trending upward since late last year but has recently started flattening out. The 200-day moving average, which represents longer-term trends, has been relatively flat but is showing signs of a potential upward turn. If the 50-day moving average crosses below the 200-day moving average, it would form a “death cross”, a bearish technical signal.

For now, CTRA remains in a neutral-to-bullish structure, but the recent dip below the 50-day moving average suggests caution.

Volume Trends

Volume has remained steady, with a slight increase on some of the recent down days. The latest volume figure of 8.67 million shares is in line with historical averages, suggesting that selling pressure has not been extreme. However, a spike in selling volume on further declines could confirm a shift toward a more bearish trend.

There was a noticeable volume surge in July, which coincided with a sharp price drop. Since then, volume has remained more stable, indicating that investors are still engaged but not aggressively buying or selling.

Relative Strength Index (RSI)

The RSI is currently at 59.66, meaning the stock is in neutral to slightly overbought territory. Typically, RSI levels above 70 indicate overbought conditions, while levels below 30 suggest oversold conditions.

CTRA’s RSI suggests that the stock is neither overextended nor deeply undervalued, though it has been trending lower after reaching overbought conditions in early February. A continued decline in RSI could signal further selling pressure.

Support and Resistance Levels

Key support appears to be forming around the $25.50 level, which aligns closely with the 200-day moving average. If this level holds, CTRA could see a bounce back toward the $27.50 – $28 range, where it previously struggled to break higher.

If the stock fails to hold $25.50, the next significant support level would likely be around $24.50 to $25, an area where the stock found support in late 2024.

On the upside, $27.50 to $28.00 remains a key resistance zone. A breakout above this level could bring a retest of $30, the recent high.

Analyst Ratings

Coterra Energy has recently received a mix of upgrades and downgrades from analysts, reflecting both optimism about its potential and caution regarding market conditions. The general consensus rates the stock as a moderate buy, with an average price target of $33.63, suggesting there could be room for upside from current levels.

🔼 Upgrades

Several analysts have expressed a bullish view on Coterra Energy’s future. 🏆 Raymond James increased their price target to $41 on expectations of strong operational efficiency and improved natural gas pricing. 📈 Barclays also raised their target, moving it from $36 to $37, citing improved cost controls and favorable positioning within the energy sector. These upgrades suggest confidence in the company’s ability to navigate market volatility while maintaining profitability.

🔽 Downgrades

On the other side, some analysts have taken a more cautious stance. ⚠️ Siebert Williams recently lowered their price target from $40 to $37, keeping a buy rating but acknowledging potential risks. The downgrade was driven by concerns over elevated OPEC+ spare capacity and uncertain global energy demand, which could weigh on oil prices and affect Coterra’s growth.

🎯 Consensus Price Target

📊 The average analyst price target stands at $33.63, with estimates ranging from $26 on the low end to $41 on the high end. This suggests analysts generally see a potential upside of nearly 32% from the current stock price. While opinions vary, the overall outlook remains cautiously optimistic, dependent on commodity price trends and broader energy market conditions.

Earnings Report Summary

Coterra Energy recently shared its latest earnings results, and there’s a lot to unpack. The company had a strong fourth quarter and a solid year overall, driven by higher-than-expected production, steady shareholder returns, and some big moves to expand its footprint.

Fourth Quarter Highlights

Production came in at 681,500 barrels of oil equivalent per day (boepd), which beat expectations and showed that the company is running an efficient operation. Strong well performance and faster turnaround times helped push numbers past the projected range of 630,000 to 660,000 boepd.

On the earnings front, Coterra reported an adjusted net income of 358 million, translating to earnings per share (EPS) of 0.49. That was better than what analysts were expecting, which was around 0.43 per share—a solid beat of about 14 percent.

For investors, the company continued to focus on returning cash. In the fourth quarter alone, 61 percent of free cash flow went back to shareholders through dividends and stock buybacks. That added up to 218 million, with 168 million in dividends and 50 million in share repurchases.

Full-Year 2024 Highlights

Looking at the full year, Coterra pulled in 1.12 billion in net income, with an operating income of 1.39 billion. These numbers reinforce that despite some industry headwinds, the company maintained steady profitability.

Shareholders saw plenty of returns in 2024. Coterra gave back 1.086 billion to investors, covering 89 percent of its free cash flow. That included 635 million in dividends and 451 million in buybacks—a strong signal that the company prioritizes rewarding its investors.

Big Moves and Future Plans

One of the biggest developments was the 3.95 billion acquisition of assets from Avant Natural Resources and Franklin Mountain Energy. This deal, finalized in early 2025, is expected to strengthen the company’s position in the Delaware Basin and fuel future growth.

With expansion comes increased spending, and Coterra expects capital expenditures to rise by about 28 percent from last year’s 1.76 billion. That extra spending will go toward integrating new assets and ramping up production.

What’s Next?

Looking ahead to 2025, Coterra is targeting total production between 710,000 and 770,000 boepd, with a larger focus on oil output. Natural gas production should stay relatively steady.

Beyond that, the company expects oil production to grow at least 5 percent per year over the next several years. To make that happen, it’s planning annual capital spending between 2.1 billion and 2.3 billion.

All in all, Coterra Energy is setting itself up for continued growth while keeping shareholders front and center.

Financial Health and Stability

Coterra is in solid financial shape, with a current ratio of 2.92 indicating strong liquidity. Return on equity sits at 8.56%, which isn’t spectacular but is reasonable for a mid-cap energy producer.

A concern for investors is the recent downturn in revenue and earnings. The company’s profit margin remains healthy at 21.38%, and operating margin is 23.49%, but these numbers can fluctuate with market conditions. The most recent quarter showed a 3.5% drop in revenue and a steeper 28.6% decline in earnings, which raises questions about short-term performance.

Strengths in financial stability

✔ A strong cash position and low debt levels allow the company to maintain operations without relying too heavily on borrowing.
✔ Profit margins remain above 20%, indicating solid operational efficiency.
✔ The company is not highly leveraged, reducing the risk of financial distress.

Areas of concern

🚩 Declining earnings could impact future dividend payouts.
🚩 The company’s profitability depends heavily on commodity price swings, making long-term forecasting more difficult.

Valuation and Stock Performance

Coterra currently trades at $25.89 per share, with a trailing price-to-earnings ratio of 17.01 and a forward P/E of 8.10. That forward multiple suggests analysts expect an earnings rebound, making the stock look relatively inexpensive at current levels.

Key valuation metrics

📉 Price-to-Book Ratio: 1.49 – The stock trades close to its book value, which is generally a sign of a fair valuation.
💰 Enterprise Value/EBITDA: 6.43 – A reasonable multiple for an energy company, suggesting it is not overvalued.
📊 Price-to-Sales Ratio: 3.48 – Slightly elevated, but not excessive for a company in this sector.

From a technical standpoint, the stock has been in a sideways trading range. It is currently below its 50-day moving average of $27.35 but sits near its 200-day moving average of $25.80. This suggests investors are in a wait-and-see mode, with no clear momentum in either direction.

Risks and Considerations

Coterra is a well-run energy company, but it comes with certain risks that dividend investors should keep in mind.

⚡ The company is highly dependent on oil and natural gas prices. If commodity prices fall, profitability and dividend payouts could decline.
📉 Earnings have taken a hit recently, down 28.6% year-over-year, which raises concerns about near-term financial strength.
💵 The hybrid dividend structure means payouts can be unpredictable, making it less appealing for investors who want steady, growing income.
🔄 Market cap fluctuations suggest that investor sentiment swings frequently with broader energy market trends.

Final Thoughts

Coterra Energy offers a compelling mix of dividend income and exposure to the energy market. The company’s balance sheet is in good shape, and the 3.45% yield provides a reasonable level of income. However, the variable nature of its dividend means that payouts will change based on profitability, which may not be ideal for all investors.

For those comfortable with the ups and downs of commodity prices, Coterra’s flexible approach to returning capital can be a benefit. However, those looking for a steady, predictable dividend growth story may prefer companies with more consistent track records of annual increases.