PBR vs PBR.A Dividends: Key Differences Between Petrobras Share Classes
- Mag Shum
- 5 days ago
- 1 min read
etrobras (PBR) dividends are exceptionally high due to a mix of strong cash flow, favorable oil prices, government pressure, and shareholder policies:
Sky-High Oil Prices: As a low-cost producer (breakeven ~35–35–40/barrel), Petrobras generates massive profits when Brent crude trades above $70, as seen in 2022–2023 post-Ukraine war.
Debt Discipline: After slashing debt to <1x EBITDA, Petrobras prioritizes returning cash to shareholders over heavy reinvestment.
Government Pressure: Brazil’s state (PBR’s largest shareholder) relies on dividends to fund public budgets, driving aggressive payouts.
Shareholder Policy: Mandates paying ≥60% of free cash flow as dividends, one of the oil sector’s most generous policies.
Risks: Dividends depend on sustained oil prices, political stability, and avoiding underinvestment in production. Recent yields (~15–20%) are enticing but may normalize if oil retreats or Brazil’s fiscal needs shift.
While Petrobras (PBR) common shares and PBR.A preferred shares have recently received equal dividend payments, key structural differences exist: By law, PBR.A preferred shares have dividend priority and are guaranteed at least 5% of share capital when dividends are paid, while common shares (PBR) have no such protection. In practice, Petrobras has paid identical dividends to both classes since 2021, but this could change during financial distress when PBR.A would be paid first. Preferred shares often trade at a slight discount, potentially offering marginally higher yields, while common shares carry voting rights that may influence future dividend policies.
