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1 Dividend You Won’t Regret Buying Source: ConocoPhillips
ConocoPhillips has paid a dividend every single quarter since 2002. That was the year Conoco merged with Phillips Petroleum. Before the merger both companies had a long history of paying dividends. Source: ConocoPhillips
Source: ConocoPhillips Not only does ConocoPhillips and its predecessor companies have a history of paying dividends, but they paid a growing dividend.
Just recently ConocoPhillips boosted its payout by 5.8%. It’s the second boost since the 2012 spin-off of its refining business. Source: ConocoPhillips
ConocoPhillips’ dividend history alone suggests that investors won’t regret buying its stock. Source: ConocoPhillips However, there are three even more compelling reasons why investors won’t regret buying ConocoPhillips.
Reason No. 1: Committed to the Dividend ConocoPhillips’ payout is on par with some of the world’s top integrated energy companies even after it spun out its own refining assets. So, even though it is now a pure-play E&P company like Devon Energy and Anadarko Petroleum, its payout vastly exceeds what those companies pay. Source: ConocoPhillips Investor Presentation
Reason No. 1: Committed to the Dividend By committing to its dividend, ConocoPhillips is focused on returns. That’s why it has jettisoned $12.4 billion of non-core assets. In the place of these assets it’s focusing on growing its most profitable assets, which has led to 11% cash margin growth. This is delivering peer-leading returns. Source: ConocoPhillips Investor Presentation
Reason No. 2: Visible Growth ConocoPhillips’ current grow plan calls for production and margins to grow by 3%-5% annually from 2014 through 2017. Its plan is much more focused on growing margins than its peers, which are leaner on the details. Devon Energy, for example, plans 10% production growth this year, with higher-margin oil production expected to grow 30%. Meanwhile, it expects to deliver 20% oil production growth next year. Anadarko Petroleum expects production to grow 5%-7% annually through 2020. However, margin growth isn’t as much of a focus, though the liquids composition of production is expected to go from 44% to 60%+.
Reason No. 2: Visible Growth As mentioned, ConocoPhillips isn’t focused on growth for the sake of growth. Instead, it is focused on growing its highest margin production. Source: ConocoPhillips Investor Presentation
Reason No. 2: Visible Growth By focusing on growing both margins and productions, cash flow is expected to surge. This will provide ConocoPhillips with plenty of free cash flow for future dividends. Source: ConocoPhillips Investor Presentation
Reason No. 3: Optionality for Future Growth ConocoPhillips is spending 15% of its $16 billion annual capital budget on exploration and appraisal to fuel production growth beyond 2017. Source: ConocoPhillips Investor Presentation
Reason No. 3: Optionality for Future Growth ConocoPhillips has several compelling future opportunities. Four discoveries in the Gulf of Mexico, including the Shenandoah and Coronado finds with Anadarko Petroleum. Unconventional opportunities in the U.S. (Permian Basin and Niobrara) and Canada (Duvernay and Montney). Source: ConocoPhillips Investor Presentation
Reason No. 3: Optionality for Future Growth Deepwater Angola is thought to be analogous to Brazil’s Santos/Campos Basins. Well positioned in LNG with projects in Alaska, Australia and Qatar. Canadian oil sands position holds upwards of 15 billion barrels of oil equivalent resource potential.
Bottom line is that ConocoPhillips’ dividend is as safe as they come. Source: ConocoPhillips Making it a dividend stock investors won’t regret buying.
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