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In late 2019, investors buying into what was then the world’s biggest IPO—the listing of Saudi Aramco—would have been in their right to expect some fireworks. Instead, it’s been one big snooze.

The world’s top oil producer, worth $1.85 trillion, continues to churn out impressive profits, but its stock has barely moved, even when it announces a big push into green energy or news leaks it’s on the prowl for a multibillion-dollar deal.

Making matters worse, the dividend it pays out each quarter looks miserly when compared to rivals’. And hopes of a share buyback to goose the stock? Forget it. The float is so minuscule there are barely any shares for management to reacquire, let alone ignite a rally.

On Wednesday, Aramco closed at 34.80 Saudi riyals ($9.28), down 0.1% year to date. The upshot: Aramco investors have missed out on the great rally in energy stocks this year. In the same period, the S&P 500 energy sector was up 26.8%.

To be fair, those same Aramco investors would have been cushioned from last year’s brutal selloff in energy stocks when the COVID-19 pandemic decimated global demand for oil. While the world’s energy majors’ shares tanked, Aramco held its own, finishing the year barely changed. It’s flat again this year, however, even as the prospect for global growth and oil demand perk up.

One lonely “buy” rating

If you like boring, unremarkable returns, this is the stock for you—provided you can find any shares.

Even analysts see it as a two-scoops-of-vanilla investment. Of the 17 brokerages covering Aramco, there’s one “buy” rating, one “sell,” and 15 “holds.”

“While Aramco has great operating metrics, we continue to see better value elsewhere,” Bernstein said in an investor note this month, underscoring the gulf between Aramco’s 4% dividend yield and the 9% to 10% average yield on emerging-market energy stocks like Russia’s Gazprom or Lukoil. Bernstein has an “underperform” rating on Aramco stock and a target price of 24 riyals, a 31% discount from Wednesday’s close.

Allen Good, an equity analyst at Morningstar, sees Aramco’s prospects still being clouded over the next 18 months or so by the COVID pandemic. Beyond that, he thinks it will be in a stronger position because of its ability to pump huge quantities of cheap crude while many international rivals are reducing investment in oil as they transition to green energy.

“Their production cost is $3 per barrel, so if there’s going to be a last man standing (in the oil industry), it’s going to be Saudi Aramco,” Good said.

“Oil demand is not going away anytime soon,” he added.

Tiny float

In the short term, however, the fundamentals of the stock could be a drag.

The Saudi government owns more than 98% of the company; Saudi citizens, institutions, and a few Wall Street firms share the leftover scraps.

The government gave Saudi retail investors an incentive to hang on to the shares initially by offering a one-for-10 share bonus to those who held the shares for six months. And crucially, it’s living up to its promise to pay a dividend of at least $75 billion a year until 2024 and guaranteed a payout on that scale to minority shareholders until then, meaning the shares yield about 4%.

But that payout looks cheap when compared to rivals. According to Bernstein, Eni shareholders see an estimated yield of 7.7%, with Exxon Mobil and Chevron paying out yields of 6% and 5.2%, respectively. Emerging-market oil majors, such as Lukoil, Gazprom, and Rosneft, pay out an even higher return.

“We continue to see better value in EM [emerging market] and DM [developed market] stocks versus Aramco,” an Aug. 8 Bernstein investor note read in underscoring the firm’s “underperform” rating on the stock.

Paying (cheap) dividends

Not surprisingly, Aramco management is getting increasing pressure to follow the Big Oil playbook to raise dividend payments (it has little scope to buy back shares) in an effort to woo new investors.

BofA Securities said this month that to stay competitive, “Aramco should at least revisit its earlier plans to progressively increase the dividend and potentially distribute any additional windfall cash flows” to shareholders.

Based on BoA’s forecast of a $68 per barrel price for Brent oil this year and $76 next, Saudi Aramco would generate a free cash flow of $95 billion this year and more than $120 billion in 2022—giving it scope to raise dividends.

Asked about dividend policy on the analysts’ call, Aramco’s CFO Ziad al-Murshed made no commitment to raise dividends, but pointed out that “historically the company has distributed special dividends.”

With the long-term upside, the relatively unspectacular performance, and steady dividend payout, the Aramco share resembles something like a bond, adds Morningstar’s Good.

Saudi Arabia’s Crown Prince Mohammed bin Salman, meanwhile, has raised the prospect that the government could sell more shares in Aramco. Good thinks this is possible in the longer term, once the world has recovered from COVID.

He thinks the Saudi government could sell more Aramco shares on the Saudi exchange, while loosening restrictions on purchases by foreign investors, followed by a potential international listing, most likely in Asia.

But first the Saudis have to get investors excited enough to buy.