Why The World’s Largest Oil Company Won't Cut Dividends

Despite a 44 percent drop in its 2020 profits, the Saudi Arabian government has instructed majority-state-owned Saudi Aramco to stick to the US$75 billion per year dividend payout for shareholders that it pledged at the time of the company’s initial public offering (IPO) in December 2019. Sticking to such a huge dividend payout – a guaranteed US$18.75 billion paid every quarter – has necessitated a significant cut in Aramco’s capital expenditure in the coming year that will damage the company’s prospects for growth…