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ConocoPhillips Message Board

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  • jabbas.bigmomma jabbas.bigmomma Jan 25, 2013 6:57 PM Flag

    Can COP Pay its Dividend?

    Motley Fool, Wed Jan 23, article titled "ConocoNoPhillips 66"

    They said " The company is committed to giving shareholders 20% to 25% of cash flows. Cash flows currently don’t pay capex and dividends and they will continue to use divestitures to pay the dividend rather than cut it."

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    • Did you READ the article? Article SAYS dividends AND CAPEX ($15 billion). Huge difference in what you said (dividends). Tell me you realize the difference. Why don't you read the article posted this afternoon regarding COP and INCREASING dividends (Seeking Alpha I believe). You will be very reassured.

      Sentiment: Strong Buy

      • 1 Reply to bradshaw22000
      • First off, thank you for taking the time on a Friday evening to share such a kind, useful and information filled response.
        2nd, if you want to make the distinction that fully paying the dividend somehow doesn't include also funding the capital program planned for the next 3 years, then that's your business. But the Motley Fool author made the point that COP doesn't have the cash flow to pay capex and dividends and that led to this post questioning if COP can fully pay its dividend. Companies that cannot fully fund dividends either are betting that growth will eventually catch up and fully fund the dividend sometime in the future, otherwise they have to shrink or cut the dividend at some time in the future.
        3rd, the Seeking Alpha article you reference doesn't directly address this question. They are high on COP because the dividend is high, has been increased the last 12 years and dividend payout ratio is under 50%. Dividend payout ratio's are great, but they don't address planned capital spending - and COP has stated they plan to invest $15B each year for the next 3. So the question goes unanswered, with a $15B/yr capital program, can COP fully fund its dividend payments?
        I had hoped to have a discussion about facts / numbers that show Motley Fool is right or wrong about their opinion. We obviously have different expectations about this message board.

 
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