Energy companies are offering "unsustainable" dividends for which they are wrongly rewarded by the market, the CEO of an energy-focused hedge fund told CNBC.
Oil companies have largely guarded their dividends, despite the collapse in crude prices since 2014. The industry has a tradition of providing steady dividends and has tended to opt for spending cuts rather than reducing payouts to investors.
Nearly 80 percent of energy companies maintained or increased their dividend payments in 2015, according to a post on the Research Centre for Energy Management website. That was despite companies struggling to generate cash in the face of depressed oil prices.
In March, Chevron chief executive John Watson reiterated the importance of dividend growth, even as he announced new spending cuts. The company has hiked dividends for 28 consecutive years.