Aramco dividend hike hands PIF $5 billion quarterly windfall: What this means

Saudi Arabia’s sovereign wealth fund is set to earn about $5 billion in quarterly dividend payments from its stake in Aramco.

Saudi Arabia’s sovereign wealth fund is set to earn about $5 billion in quarterly dividend payments from its stake in Aramco, after the government handed it more shares in the state-controlled oil company, which then said it would boost shareholder payouts.

The Saudi Aramco logo is pictured. (Reuters)

The hike in Aramco’s dividend, which is set to total at least $124 billion this year, comes days after Crown Prince Mohammed bin Salman ordered the transfer of an 8% stake in Aramco to the Public Investment Fund.

The PIF, as the wealth fund is known, now holds a 16% stake in Saudi Aramco. Cash from the oil firm’s dividends will be a handy boon for the fund, which controls assets of about $900 billion in total.

The fund is set to ramp up spending over the next few years on projects like Neom, a more than $500 billion new city under construction on the kingdom’s west coast. It’s committed to spending $40 billion a year domestically to help diversify the country’s oil dependent economy.

Its ability to fund such huge projects has increasingly been questioned by analysts at a time when the government is forecasting budget deficits until at least 2026.

The PIF has already raised $7 billion from two bond sales so far this year. Its governor, Yasir Al Rumayyan, has said that the fund’s annual deployment is set to rise to $70 billion from 2025.