* Total targets 5%-6% dividend growth a year, up from 3%
* Sees cash flow increasing by $5 bln by 2025
* Oil majors taking steps to lure investors
* Sector under pressure to address climate change
(Adds CEO comments on share buyback, investments)
By Sudip Kar-Gupta
PARIS, Sept 24 (Reuters) - French oil and gas company Total
pledged on Tuesday to increase dividends and consider
buying back shares, echoing moves by rivals to woo investors
worried about the impact of climate change on fossil fuel
stocks.
Total said it would increase its dividend by 5% to 6% a
year, higher than its previous goal of raising dividends by 3%,
which would result in a third interim dividend of 0.68 euros
($0.75) per share for 2019.
The company said its confidence in its strategy meant it was
now forecasting an increase in cashflow of more than $5 billion
by 2025 in an environment with oil priced at $60 a barrel,
equivalent to an average increase of about $1 billion per year.
Large oil companies are coming under growing pressure to
demonstrate they are taking concrete steps to tackle climate
change and several high-profile funds have decided to sell out
of fossil fuel stocks altogether.
At its biggest annual gathering in Davos, oil industry
bosses identified higher returns as one of their main tools to
help offset that pressure on their companies.
"We think that today, the appetite of our investors is even
larger for having direct cash coming in their portfolio,"
Total's Chief Officer Patrick Pouyanne said during the company's
Investor Day in New York.
"If (the oil) price is going up again at around $70 per
barrel, we will have much more revenue, we will use share
buybacks," Pouyanne said.
Oil prices have been relatively high since the Sept. 14
attack on Saudi Arabia's largest crude processing facility
halved output from the world's top oil exporter.
Benchmark Brent crude spiked to over $70 a barrel
after the attacks and is currently trading near $64 a barrel,
well above lows of under $30 plumbed in 2016.
'STRONG DISCIPLINE'
A listing of Saudi Aramco, the world's largest oil company,
is also expected to present a challenge if it sucks capital from
rivals as investors reallocate funds within their shrinking pot
for fossil fuel stocks.
In June, Total's rival Royal Dutch Shell also
outlined plans to boost shareholder returns after 2020.
Total's shares initially rose by about 1% but pared their
gains and ended down 1.8% at 47.75 euros ($52.60), tracking a
retreat in oil prices.
Investment bank Cowen, which maintained an 'outperform'
rating on Total with a price target of $64, said in a note that
the dividend growth was in line with its peer group.
Clairinvest fund manager Ion-Marc Valahu said Total's update
was positive for investors.
"Most oil majors have not raised their capital expenditures
in recent years but are still generating lots of cash, and the
stock prices of most oil companies have been lagging behind the
moves in the price of oil," said Valahu, who owns Total shares.
In July, Total said it would sell about $5 billion of
assets, mostly from its exploration and production business as
it sharpens its focus on low-breakeven projects that can weather
any weakness in oil prices.
Pouyanne told analysts in New York that the company expected
to sell $2 billion worth of assets by the end of the year out of
the planned $5 billion asset sales over 2019 and 2020.
Total said it would maintain its "strong discipline on
investment and cost" in the period through 2025 and said it
planned to invest $16 billion to $18 billion of capital from
2019 to 2023.
($1 = 0.9078 euros)
(Reporting by Sudip Kar-Gupta; additional reporting by Dmitry
Zhdannikov in London; editing by Kim Coghill, Sherry
Jacob-Phillips, Jan Harvey and David Clarke)
