Want $1,000 in dividend income? Here’s how much you need to invest in Devon Energy stock.

Devon Energy (DVN -0.49%) the stock has gained massive popularity among income investors after it launched the oil industry’s first fixed plus variable dividend policy in 2021. Every time the price of crude oil rises, so does Devon’s dividend payout, making it one of the more interesting energy dividend stocks. .

Here’s how you can earn $1,000 in annual dividends from this oil stock.

Devon pays a fixed dividend each quarter, plus a variable dividend of up to 50% of the excess free cash flow (FCF) it generates during the period. For example, the company just declared a dividend of $0.44 per share for its second quarter, comprising a fixed and variable payment of $0.22 per share each.

Because Devon’s variable payout fluctuates based on the price of crude oil and FCF, the total stock dividend varies each quarter. For simplicity’s sake, let’s assume that Devon will pay the same dividend as Q2 for the rest of the year.

At $0.44 per share, that’s an annual dividend of $1.76 per share. At that payout, buying about 570 shares, or investing about $24,600 in Devon stock at the current price, can earn $1,000 in annual dividends.

Good time to buy these dividend stocks

Devon Energy just reported record production for Q2 and raised its production guidance for the second time for 2024. The oil giant is also on track to acquire Grayson Mill Energy’s Williston Basin business for $5 billion, which which should triple its production from the basin and immediately create revenue and cash flow.

In fact, the positive nature of the acquisition has already encouraged Devon’s management to expand its share buyback program by 67% to $5 billion by mid-2026. I wouldn’t be surprised if Devon also increases its fixed dividend — raised its fixed payout by 10% to $0.22 per share in 2023.

A potentially higher fixed dividend coupled with a variable payout that should increase with oil production and prices make Devon Energy a compelling dividend stock to buy.