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ConocoPhillips Rewards Investors With Dividend Hike & Buyback

Zacks Equity Research

ConocoPhillips COP recently announced a hike in its quarterly dividend and plans to repurchase of stocks worth $3 billion.

The new dividend of 42 cents per share reflects an increase of 38% from the prior payout. The dividend is likely to be paid on Dec 2, to stockholders of record as of Oct 17. On an annualized basis, the company hiked its dividend by roughly $500 million.

Moreover, ConocoPhillips has announced its intention to buy back stocks worth $3 billion in 2020. Both the dividend hike and share buyback program reflect the company’s strong focus on returning cash to shareholders consistently.

Importantly, the upstream energy player has long been spending capital within cashflows, reflecting the company’s prime intention of returning shareholders’ cash rather than focusing on absolute production growth. In fact, ConocoPhillips has reaffirmed that it will continue to return more than 30% of its operating cashflow every year through both dividend payment and stock repurchases.

In other words, the slowdown in the broader energy sector, as the weaknesses in crude pricing scenario prevails, couldn’t stop the company from increasing dividend and planning stock repurchases. This commitment is getting reflected in ConocoPhillips’ stock price, which has outperformed both the industry and the sector year to date. 

Currently, ConocoPhillips which is headquartered in Houston, TX, carries a Zacks Rank #3 (Hold). Meanwhile, better-ranked stocks in the energy space are Matrix Service Company MTRX, Shell Midstream Partners LP SHLX and Dril-Quip Inc DRQ. While Matrix Service and Shell Midstream sport a Zacks Rank #1 (Strong Buy), Dril-Quip carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Matrix Service has managed to beat the Zacks Consensus Estimate for earnings in three of the past four quarters.

Shell Midstream has posted an average positive earnings surprise of 3.8% for the past four quarters.

Dril-Quip beat the Zacks Consensus Estimate in three of the trailing four quarters, the average earnings surprise being 49%.

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Shell Midstream Partners, L.P. (SHLX) : Free Stock Analysis Report
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