Aramco Dividends: Comprehensive Explanation of Profit Policy

Saudi Aramco (the Saudi Arabian Oil Company) is one of the largest global companies in oil and gas production, refining, and export, owned by the Saudi government and a key economic driver for the Kingdom. Since its establishment, Aramco has held exceptional strategic importance, controlling the largest proven oil reserves in the world and playing a crucial role in shaping regional and global energy policies. With its listing on the Saudi financial market (Tadawul) in December 2019, Aramco became the largest listed company in the region, with a share price at the IPO of 32 SAR, valuing it at approximately 7.1 trillion SAR ($1.9 trillion), placing it among the top companies globally. The importance of Aramco extends beyond its financial size; it also represents the backbone of the Saudi economy, managing significant investments in infrastructure, industrial development, and the Saudi Vision 2030 programs. This economic role has made Aramco's dividends a highly significant financial event, as these distributions are used not only to support shareholder income but also as a key tool in financing the state's budget. From a market perspective, Aramco's stock (symbol: 2222) is considered a leading stock in the main market index (TASI), representing a significant weight in the index calculation due to its massive market capitalization and high liquidity. Additionally, Aramco's presence in the energy sector provides the Saudi market with a strategic dimension in global markets, attracting a wide range of local and international investors. All these factors combined make studying Aramco's dividends essential for understanding the dynamics of the Saudi financial market and its role in maintaining national economic stability and enhancing investor wealth.

Aramco's dividend distribution policy is characterized by a clear specificity, relying on a dual model that combines fixed base dividends and performance-linked dividends. This mechanism aims to achieve a balance between ensuring a minimum income for shareholders and the flexibility to respond to profitability changes and market conditions. Base dividends are fixed amounts announced by the company periodically, usually quarterly, regardless of oil price fluctuations or short-term business results. For example, base dividends were approximately 0.30 SAR per share in most quarters of 2024, providing shareholders with a regular cash flow and enhancing confidence in the stock as a stable investment tool. Performance-linked dividends are additional amounts paid when the company achieves profits exceeding targets or when surplus cash is available due to improved market conditions or operational efficiency. In the fourth quarter of 2024, for example, total dividends of 0.3312 SAR per share were announced, including base dividends plus part of the performance-linked dividends, bringing the total distributed profits to 80.10 billion SAR for the quarter. This system allows Aramco to maintain its commitments to shareholders even in times of economic challenges, with the potential to reward shareholders with additional increases during prosperous periods. Final dividends are determined based on the board's review of the company's financial performance and investment commitments, including expansion plans and infrastructure projects. The policy also considers government requirements, as most dividends go to the Saudi government as the largest shareholder. This mechanism is flexible and competitive compared to traditional distribution models, granting Aramco the ability to maintain its stock's attractiveness in the market and support the national economy through regular and stable cash flows.

Since its listing on the Saudi financial market at the end of 2019, Aramco's dividends have been characterized by gradual growth and a commitment to a generous distribution policy compared to local and global market standards. In the year of listing, the company set an annual dividend distribution policy of no less than $75 billion, which at the time represented one of the largest distribution commitments in the world, attracting significant interest from international investors. In the following years, Aramco continued to pay quarterly distributions, with annual distributions reaching high levels, recording over 300 billion SAR in 2023, with an average quarterly distribution of approximately 75 billion SAR. In 2024, despite a decline in oil prices and a decrease in profits by 12-13%, the company maintained strong distributions, with total profits for the fourth quarter alone reaching 80.10 billion SAR, bringing the total annual distributions to approximately 320 billion SAR. This consistency in distributions reflects the resilience of Aramco's policy and its ability to manage the balance between funding investment expansions on one hand and ensuring income stability for shareholders and the Saudi government on the other. For 2025, Aramco announced its intention to maintain distributions of 320.4 billion SAR, equivalent to about $85.4 billion, with the possibility of adjusting these distributions quarterly based on financial performance and market conditions. It is worth noting that this policy has not been significantly affected by oil crises or economic challenges, as the company continued to pay distributions even during periods of price pressure or declining global demand. This approach has made Aramco's stock an attractive option for investors seeking stable income and has reinforced the company's position as a fundamental pillar of the Saudi economy while supporting the government's ability to finance the public budget through continuous distribution flows.

The year 2024 witnessed a relative decline in Aramco's financial results compared to the previous year, with net profit after minority rights dropping to approximately 398.4 billion SAR, compared to 454.8 billion SAR in 2023, a decrease of about 12.4%. This decline is primarily attributed to falling oil prices in global markets, a relative slowdown in demand, and rising operational costs. Despite this profit decline, Aramco continued to distribute strong dividends to its shareholders, with total distributions for the fourth quarter reaching 80.10 billion SAR, at a rate of 0.3312 SAR per share, while the total annual distributions rose to about 320 billion SAR. This performance reflects the company's ability to efficiently manage its cash flows and maintain its commitment to the distribution policy even under market pressures. Notably, the company injected significant capital investments amounting to approximately 199.9 billion SAR in 2024, indicating its commitment to implementing long-term strategic projects, such as gas field development and expanding refining and petrochemical capacities. While these investments may reduce available liquidity for distributions in the short term, they aim to enhance the company's future growth and provide additional income sources. The company's CFO, Ziad Al-Murshid, indicated that Aramco may resort to increasing debt to finance these projects without compromising distribution plans. Overall, the 2024 results reflect Aramco's ability to adapt to market fluctuations, control expenses, and maintain a high level of distributions, supporting stock stability and investor confidence. This approach exemplifies prudent financial management, considering both growth requirements and commitments to shareholders.

Aramco's stock (2222) represents one of the most important investment assets in the Saudi financial market, closely monitored by local and international investors. In 2025, the stock price reached approximately 24.3 SAR, a relative decline from the initial offering price of 32 SAR in 2019, yet it remained stable within the range of 24-30 SAR in recent years. This stability reflects the company's robustness and its ability to absorb fluctuations in global oil prices. In terms of financial indicators, the price-to-earnings (P/E) ratio is estimated at around 12-15 times based on 2024 earnings, a rate consistent with major global oil companies, indicating a moderate valuation of the stock considering the company's profitability and its massive size. The earnings per share (EPS) for 2024 was approximately 1.6 SAR, based on a net profit of about 398 billion SAR distributed over 200 billion shares. This performance is commendable compared to local market standards and reflects the company's ability to achieve strong profits even amidst declining oil prices. As for the dividend yield, it is among the highest in the market, reaching approximately 5-6% or more, surpassing most companies listed on Tadawul. For instance, the fourth-quarter distribution was 0.3312 SAR per share, and when aggregating the distributions for all four quarters in 2024, the total annual distributions exceeded 1.3 SAR per share. This high yield makes Aramco's stock a preferred choice for investors seeking stable periodic income. Additionally, the stock features high liquidity and a significant weight in the main market index, enhancing its attractiveness to major investment portfolios and index funds. All these indicators highlight the importance of understanding the distribution policy and monitoring stock performance within the context of local and international markets.

Global oil prices are a pivotal factor in determining Aramco's profitability and the size of the distributions it announces annually. Given the company's dominance in oil production and export in the Kingdom, any change in global prices directly reflects on its revenues and net profits. In 2024, oil markets experienced a decline in prices compared to previous peaks, leading to a nearly 13% drop in Aramco's net profit to around 398.4 billion SAR. Despite this decline, the company managed to continue paying strong dividends thanks to operational efficiency and cost control. Historically, whenever oil prices rise, profit margins increase, and cash flows to the company surge, allowing for higher distributions or the addition of performance-linked dividends. For instance, during periods of rising prices in 2022, Aramco recorded record profits, which reflected in increased cash distributions to shareholders. Conversely, during price drops, as seen in 2015 or during the COVID-19 pandemic in 2020, the company had to settle for fixed base distributions without additional increases. The company’s policy relies on distribution flexibility, balancing market fluctuations with its investment commitments. It is noteworthy that Aramco often retains cash reserves to face periods of price declines, enabling it to continue paying a minimum level of distributions even in challenging market conditions. Additionally, linking the distribution policy to actual financial results allows the company to swiftly adjust distributions in response to economic changes without compromising its financial stability or expansion plans. This integration between oil prices and the distribution policy makes understanding developments in energy markets essential for evaluating the future of Aramco's distributions.

The Saudi government plays a pivotal role in shaping Aramco's dividend distribution policy, as it is the largest shareholder with over 90% of the company's capital through the Public Investment Fund and other government entities. This situation makes Aramco's cash distributions not merely a tool to satisfy individual and institutional investors but also a fundamental pillar in financing the state's budget. When announcing dividends, the majority of them go directly to the state treasury, contributing to covering budget deficits, funding developmental projects, and supporting Saudi Vision 2030 programs. This close relationship between Aramco and the government means that any decision regarding distributions must consider the financial needs of the state, especially amid fluctuations in global oil prices. For example, in years with declining oil revenues, Aramco's distributions played a vital role in bridging governmental financial gaps. On the other hand, the government ensures that dividend distributions do not affect the company's ability to implement its long-term investment plans, such as gas development projects and expansion into renewable energy. For this reason, the distribution policy relies on a mix of fixed base dividends and performance-linked dividends, allowing for a balance between supporting the public budget and financing the company's internal growth. Moreover, the government, as the largest shareholder, participates in strategic decisions related to distributions through the board of directors, ensuring alignment between the company's policy and national economic objectives. Overall, the government's role highlights how Aramco's distributions serve as a dual financial tool: supporting stable shareholder income while simultaneously enhancing the sustainability of the Kingdom's public finances.

Saudi Aramco places utmost importance on major capital investments in its strategic plans, as these investments are a key element in enhancing the company's future growth and improving its competitiveness both locally and internationally. In 2024, the company's capital expenditures reached approximately 199.9 billion SAR, with expectations of rising to between 195 and 217.5 billion SAR in 2025. These investments include the development of oil and gas fields, refinery expansions, petrochemical projects, and investments in renewable energy and technology. These expenditures directly impact the liquidity available for distributions, as major projects require allocating substantial financial resources that may limit the ability to increase distributions in the short term. Nevertheless, Aramco views these investments as a means to enhance diversified income sources, with new gas projects (such as the Jafurah project) expected to generate additional income ranging from 34 to 38 billion SAR annually by 2030, along with returns from refining and petrochemicals estimated at 30-38 billion SAR annually. To balance funding expansions while maintaining strong distributions, Aramco announced its intention to increase the debt ratio in its financial structure, allowing for financing major projects without sacrificing base or performance-linked distributions. This approach provides the company with flexibility in facing market fluctuations and ensures the continued flow of profits to shareholders even during periods of intensive investment. The financial management closely monitors the impact of these investments on cash flows and determines the level of distributions based on the overall financial situation and growth needs. Overall, capital investment forms the cornerstone of Aramco's growth strategy and largely determines the company's ability to maintain its stable and rewarding distribution policy.

Saudi Aramco occupies a unique position in the energy sector, not only in the Kingdom but globally. Locally, Aramco is the primary producer and exporter of oil and gas, with no direct competing companies in the same business scope. Other listed sector companies in the Saudi market, such as the National Shipping Company (Bahri) or the Saudi Electricity Company, play complementary roles in the oil value chain but do not compete with Aramco in production volume or market influence. In contrast, Aramco faces real competition globally from major oil companies such as ExxonMobil, Chevron, Shell, BP, and Total. These companies compete for global market shares, attracting investors, and developing modern technologies in exploration and production. Additionally, national oil companies in Gulf countries (such as ADNOC, Qatar Energy, and Kuwait Petroleum) represent regional competitors in some markets, especially in the fields of export and refining. With the world's shift towards clean energy, Aramco has also begun to face indirect competition from renewable energy and hydrogen companies, prompting it to invest in gas, petrochemicals, and renewable energy projects as part of its income diversification strategy. Nevertheless, Aramco retains an absolute competitive advantage due to its vast reserves, low production costs, and ability to adjust production in coordination with OPEC+ policies. Aramco dominates about 20-25% of the value of the main Saudi market index, granting it wide influence over local market movements. Additionally, its high dividends make it an attractive center for investors seeking stable income. In the face of international competition, Aramco relies on quality, operational efficiency, and innovation, along with strong government support, to maintain its leadership position and enhance its ability to pay stable and rewarding dividends under various economic conditions.

Saudi Aramco adopts a well-considered dividend distribution policy aimed at achieving a delicate balance between the sustainability of the company's financial growth and maintaining the attractiveness of the stock for investors. This policy is based on two main pillars: the first is ensuring a minimum level of base dividends, which provides shareholders with a regular cash flow and enhances market confidence in the stock. The second pillar is performance-linked dividends, which allow for rewarding shareholders when profits or surplus liquidity are achieved, providing flexibility in distribution and increasing the stock's attractiveness during prosperous periods. The company determines the level of distributions based on a comprehensive review of financial performance, cash flows, investment needs, and the overall economic situation. It also considers government requirements and commitments to finance strategic projects. For example, in years with significant capital expansions, such as building gas or refining projects, Aramco balances the size of distributions with the need to inject investment while ensuring not to fall below the minimum level of base dividends. During periods of declining oil prices or market fluctuations, the policy provides flexibility to adjust distributions without negatively impacting the company's financial stability. This approach is advanced compared to most companies listed in the Saudi financial market and globally, granting Aramco a powerful tool to maintain investor confidence and attract local and international capital. It also enhances the company's ability to support the national economy by financing the public budget and providing stable income for individual and institutional shareholders. Ultimately, Aramco's dividend policy demonstrates a clear commitment to financial sustainability while considering growth and future development requirements.

Saudi Aramco places great importance on the transparency of its dividend distribution processes and is committed to announcing entitlement and distribution payment dates periodically and systematically. The company typically announces distribution details quarterly, specifying three key dates: the distribution announcement date, the ex-dividend date, and the payment date. The ex-dividend date is usually set a few days after the announcement, marking the day when an investor must own the shares to qualify for the distributions. The payment date is often two to three weeks after the ex-dividend date, when profits are directly transferred to the bank accounts of registered investors. This process is characterized by ease and clarity, requiring no additional actions from investors, as their share is automatically calculated based on the number of shares they own on the ex-dividend date. Both individual and institutional investors benefit from distributions at the same rate per share, providing everyone with an equal opportunity to receive periodic income. It is worth noting that most distributions go to the Saudi government as the largest shareholder, while other shareholders (about 5% of freely traded shares) receive their share according to their ownership. Distribution details and dates are announced through Aramco's official website, the Saudi Tadawul platform, and financial media. This transparent system helps investors plan their investments and manage their cash flows effectively, enhancing the stock's attractiveness to investors seeking regular income. In the event of any changes in the distribution policy or payment dates, the company promptly updates its data and informs the market, reflecting its commitment to governance and disclosure standards in the Saudi financial market.

Saudi Aramco aims to achieve sustainable growth in dividend distributions in the medium to long term while maintaining its ability to finance strategic investment expansions. Amid global shifts towards clean energy and changing oil demand patterns, the company is diversifying its income sources through significant investments in gas, petrochemicals, and renewable energy. In early 2025, Aramco announced expectations of total distributions amounting to 320.4 billion SAR for the year, with the possibility of adjusting this figure based on actual performance in the upcoming quarters. These trends demonstrate management's desire to enhance the stock's attractiveness to investors and ensure stable cash flow for shareholders while financing future growth projects. The company intends to continue its strategy of increasing debt in a measured manner to finance capital expenditures without negatively impacting the level of distributions, providing additional flexibility in managing cash flows. Aramco also closely monitors developments in global oil prices and adjusts its distribution policy according to market conditions while committing to not falling below the minimum level of base distributions. In light of these trends, Aramco's distributions are expected to remain one of the main attractions for investment in the Saudi market while maintaining its position as a pillar of the national economy. The future of distributions hinges on the company's ability to balance investment growth, respond to market changes, and meet shareholder expectations. In this context, financial management plays a crucial role in reviewing policies and setting priorities, ensuring the sustainability of distributions in the long term and enhancing the overall value of the company and its shareholders.

Aramco's dividends are a fundamental pillar in supporting the national economy, providing substantial cash flows that represent a significant portion of the state's non-oil revenues. The annual distributions, which exceeded 320 billion SAR in 2024, enhance the government's ability to finance strategic projects, bridge budget deficits, and support development and social welfare programs. The effects of these distributions extend beyond the government sector, impacting the entire Saudi financial market. As Aramco's stock is one of the largest components of the main market index (TASI), its distributions influence index movement, market liquidity, and investor confidence. Additionally, the high yield on distributions makes the stock attractive to both local and international investment portfolios, stabilizing the market during periods of economic volatility. For individuals and institutions, Aramco's distributions provide a reliable source of income and help diversify investors' income sources away from short-term speculation. The distributions also support the stability of local stock prices and mitigate violent fluctuations that may arise from sudden movements in oil prices or global markets. It is noteworthy that the sustainability of Aramco's distributions grants the Saudi financial market a strong reputation among emerging markets, attracting foreign capital seeking safe investments with rewarding returns. Ultimately, Aramco's dividends form an essential link between the company's financial performance, national economic stability, and the attractiveness of the Saudi financial market as a regional and global investment hub.