Should Investors Buy ConocoPhillips (COP) if the Company No Longer Does?

Page 1 of 2

Over the last few years, ConocoPhillips (NYSE:COP) was a huge buyer of its own stock. Unfortunately for investors the company has suddenly stopped buying the stock over the last two quarters. Should investors hold onto the stock if the company isn’t buying any more?

After the spin-off of the refining business, Phillips 66 (NYSE:PSX), last year, the company is now a leading independent oil and gas producer. The stock offers a solid 4.6% dividend even if the company no longer returns capital to shareholders via a stock buyback.

The large dividend remains attractive, but investors have several other options in the mega-cap oil exploration sector with similar yields.

Slowing stock buyback

The company that was buying over $3B worth of a stock a quarter has slowed down to virtually no buybacks in the last two quarters of 2012. While the stock hit highs at the end of January, it wasn’t appreciably higher than during most of 2011 and 2012 suggesting that unfortunately valuation isn’t the reason to reduce buybacks.

The below table highlights the net payout yields (NPY) of ConocoPhillips over the last 5 quarters:

Worth noting is that although the company reduced the buyback, it doesn’t necessarily change the competitive position with other exploration stocks that weren’t buying stock. Now though, the dividend yield is a more comparable value.

Saving grace

The major saving grace for holding onto this stock is the other mega-cap stocks in the sector haven’t generally bought back stock outside of Exxon Mobil Corporation (NYSE:XOM). Below is a selection of high yielding, oil and gas exploration stocks.

BP plc (NYSE:BP) – the company has a $137B market cap and a nearly 5% dividend yield. BP has not bought stock in over a year.

Chevron Corporation (NYSE:CVX) – the company has a market cap of $225B and a 3.1% dividend yield. Over the last year, the company has averaged a buyback of around $1B a quarter or 2% of outstanding shares.

Exxon Mobil Corporation – the company has a massive market cap of around $400B and a 2.5% dividend yield.  Exxon has averaged a $5B quarterly buyback that amounts to roughly 5% of the outstanding stock on a yearly basis.

TOTAL S.A. (NYSE:TOT) – the company has a $117B market cap and a dividend yield of almost 5%. Total has only purchased a limited amount of stock in the last year.

5-Year Chart –Total Returns

The below chart highlights the total returns of these five oil exploration stocks over the last five years:

COP Total Return Price data by YCharts

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!