ConocoPhillips stock offers a buying opportunity for dividend investors

ConocoPhillips stock
2 years ago
2 mins read

ConocoPhillips (NYSE: COP) stock price has been trading in a narrow range over the past couple of months amid lower oil prices. The coronavirus impact and massive drop in oil prices have negatively impacted the performance of oil and gas producers in the past couple of months.

Several oil producers have slashed their dividends and investment plans in order to save cash during uncertain times. Despite the historical drop in oil prices, ConocoPhillips is among the few companies that have sustained dividends. It currently offers a quarterly dividend of $0.42 per share, yielding above 4.5%.

The shares of the largest US exploration and production company are down almost 44% so far this year. The dip in its share price is presenting a buying opportunity for long-term dividend investors. This is because ConocoPhillips has the potential to generate positive free cash flow even in the depressed oil price environment.  

COP ConocoPhillips daily Stock Chart
ConocoPhillips stock performance. Finviz chart

The company claims that its breakeven point stands below $40 a barrel. This means that ConocoPhillips has the potential to remain profitable at current oil prices. The company plans to restore its full production capacity by the end of the second quarter, which would help in enhancing revenue and earnings.

On the liquidity side, the company appears strong enough to pay dividends and invest in growth opportunities. ConocoPhillips ended the second quarter with $13 billion in liquidity, including cash and short-term investments of $7 billion. Meanwhile, its annual dividend payments stand around $1.5 billion.

ConocoPhillips stock is also likely to move higher in the coming days as economic data is pointing stronger than expected recovery. United States, Europe, and several other key Asian countries have lifted their economic forecasts amid declining virus infections and robust business activities. Its stock is down almost by half compared to 52-weeks high of $67 a share. The shares are currently trading around 17 times to earnings.  

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Justinas Baltrusaitis

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.