Why It Might Not Make Sense To Buy Murphy Oil Corporation (NYSE:MUR) For Its Upcoming Dividend

Simply Wall St

Fri, February 13, 2026 at 7:24 PM GMT+9 4 min read

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Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Murphy Oil Corporation (NYSE:MUR) is about to go ex-dividend in just 3 days. The ex-dividend date occurs one day before the record date, which is the day on which shareholders need to be on the company’s books in order to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Murphy Oil’s shares before the 17th of February in order to be eligible for the dividend, which will be paid on the 2nd of March.

The company’s next dividend payment will be US$0.35 per share, on the back of last year when the company paid a total of US$1.40 to shareholders. Looking at the last 12 months of distributions, Murphy Oil has a trailing yield of approximately 4.3% on its current stock price of US$32.90. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Murphy Oil can afford its dividend, and if the dividend could grow.

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Murphy Oil distributed an unsustainably high 179% of its profit as dividends to shareholders last year. Without extenuating circumstances, we’d consider the dividend at risk of a cut. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. The company paid out 94% of its free cash flow over the last year, which we think is outside the ideal range for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we’d generally want to look more closely here.

As Murphy Oil’s dividend was not well covered by either earnings or cash flow, we would be concerned that this dividend could be at risk over the long term.

See our latest analysis for Murphy Oil

Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.

NYSE:MUR Historic Dividend February 13th 2026

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It’s encouraging to see Murphy Oil has grown its earnings rapidly, up 35% a year for the past five years. Earnings per share have been growing rapidly, but the company is paying out an uncomfortably high percentage of its earnings as dividends. Generally, when a company is growing this quickly and paying out all of its earnings as dividends, it can suggest either that the company is borrowing heavily to fund its growth, or that earnings growth is likely to slow due to lack of reinvestment.

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The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. Murphy Oil’s dividend payments are effectively flat on where they were 10 years ago.

The Bottom Line

Is Murphy Oil an attractive dividend stock, or better left on the shelf? While it’s nice to see earnings per share growing, we’re curious about how Murphy Oil intends to continue growing, or maintain the dividend in a downturn given that it’s paying out such a high percentage of its earnings and cashflow. Overall it doesn’t look like the most suitable dividend stock for a long-term buy and hold investor.

So if you’re still interested in Murphy Oil despite it’s poor dividend qualities, you should be well informed on some of the risks facing this stock. To that end, you should learn about the **3 warning signs **we’ve spotted with Murphy Oil (including 1 which is significant).

Generally, we wouldn’t recommend just buying the first dividend stock you see. Here’s a curated list of interesting stocks that are strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch** with us directly.**_ Alternatively, email editorial-team (at) simplywallst.com._

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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