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 Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

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!