Riyadh – Mubasher: Al Rajhi Capital Research has initiated coverage of the Saudi Arabian Oil Company (Saudi Aramco) with a fair price evaluation of SAR 37.5 per share, with a ‘Neutral’ rating given an 8.4% upside.

The fair price translates into a company valuation of $2 trillion, according to a report by the research firm on Sunday.

Moreover, the report noted that with a dividend prioritization of $75 billion between 2020 and 2024 to non-government shareholders, Aramco stock gives the cushion of a bond for the downside and capital appreciation on the upside.

“We forecast $80 billion dividend for 2020 and, based on our analysis, implied dividend yields could range from 3.6%, based on local market examples, to 4.6%, based on IOC US peers, arrived by using spreads between dividend and bond yields,” Al Rajhi Capital stated, noting that on the longer term, Aramco gives more stability in production growth with huge proven reserves and stable cash costs.