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Saudi Aramco targets $75B dividend in 2020

Saudi Arabian Oil Co., or Saudi Aramco, is planning to distribute a dividend of $75 billion in 2020, with the aim to prioritize nongovernment shareholders.

Aramco said the shareholders will still receive their pro-rata share of a $75 billion equivalent dividend if the declared dividend is lower from 2020 to 2024, Aramco said in a presentation.

The potential dividend will give investors a yield of 3.75% based on the company's $2 trillion valuation, according to a Sept. 30 report from Bloomberg. The yield is still lower than Shell's 6.22% payout and Exxon's dividend of 4.9%, Bloomberg said.

Under a progressive royalty scheme, effective Jan. 1, 2020, Aramco will be required to pay 15% with Brent prices up to $70 per barrel, 45% with Brent prices between $70/bbl and $100/bbl, and 80% with Brent prices above $100/bbl. The new royalty scheme is lower when prices are lower than $70/bbl, but higher after surpassing the amount, Bloomberg reported.

Saudi Arabia is planning to list up to 10% of Aramco, with the first round to be held at its local Riyadh Stock Exchange followed by an international IPO likely in Japan. Saudi Arabia earlier aimed to sell 1% of Aramco's stake in Riyadh before year-end and another 1% on the same exchange in 2020.

Aramco targets to launch a multiphase listing in November, which is expected to raise up to $200 billion based on a target valuation of $2 trillion.

Saudi Aramco earlier selected three book runners and picked nine banks to lead its IPO.