We recently compiled a list of the 13 Cheap High Dividend Stocks To Invest In Now. In this article, we are going to take a look at where ConocoPhillips (NYSE:COP) stands against the other cheap high dividend stocks.
According to Deutsche Bank Wealth Management, the global economy in 2025 is expected to face some tough challenges, with growth forecasts looking modest – the US GDP at 2.0%, the Eurozone at 0.9%, and China at 4.2%. Inflation may persist due to higher fiscal spending and potential tariff hikes, which could limit central banks’ ability to lower interest rates. This could in turn lead to more market volatility. Productivity has been growing slowly, and in some cases, it has even declined, affecting long-term living standards. However, AI and new technologies could help drive productivity higher, though it will take time to see noticeable results.
Despite these challenges, 2025 will be about navigating turbulent times, with a clear gap between the high-tech, high-productivity US economy and Europe, which is lagging behind. Policy focus is shifting from monetary to fiscal, with China taking the lead on new initiatives. Stocks, especially in the United States, remain a strong opportunity for growth, while European equities offer potential despite economic struggles.
In Q4 2024, S&P Global reported that US domestic stocks saw a net dividend increase of $11.7 billion, which was lower than the $13.7 billion increase in the same quarter last year. Overall, dividend increases totaled $14.2 billion for the quarter, which was down from $17.5 billion in Q4 2023. For the entire year, dividends grew by $53.3 billion, a significant jump from the previous year’s $36.5 billion. On a per-share basis, the broader market’s dividends hit a record, growing by 6% to $19.81 per share. In Q4 last year, there were 635 dividend increases, which is a 10.2% decrease compared to the 707 increases in Q4 2023.
Over the past 12 months, total dividend increases amounted to $71.4 billion, up from $65.1 billion in the previous year. Interestingly, the number of companies cutting dividends decreased by 19.5% in Q4, with only 33 companies lowering their payouts, compared to 41 the year before. Here, we discuss some of the best cheap high dividend stocks.
Our Methodology
For this article, we used the Finviz stock screener to filter out stocks with dividend yields over 3% and P/E ratios under 15. We focused on picking stocks with a consistent record of paying dividends, offering dividend growth, and being financially stable to steer clear of yield traps. The list below is ranked in ascending order of the dividend yield as of February 17. We have also mentioned the P/E ratios and hedge fund sentiment as of Q3 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
An underground network of pipelines transporting oil through an expansive terrain.
ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 66
Dividend Yield as of February 17: 3.24%
P/E Ratio: 12.41
ConocoPhillips (NYSE:COP) is a Houston-based energy company that produces and distributes crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids. It ranks 13th on our list of the best dividend stocks to buy, with a dividend yield of 3.24% as of February 17.
On February 10, Raymond James downgraded ConocoPhillips (NYSE:COP) from Strong Buy to Outperform and cut its price target from $157 to $124. This comes despite the company outpacing Q4 expectations, with earnings 8% higher than analysts predicted and production beating forecasts, given the solid growth in the Lower 48 states. The recent Marathon Oil acquisition is already paying off, reflected in a leaner 2025 capex forecast of under $13 billion. That said, Q1 2025 production might take a slight hit due to weather and maintenance slowdowns. Still, Raymond James sees COP as one of the best-run exploration and production companies out there, with a solid global asset portfolio and an attractive valuation.
ConocoPhillips (NYSE:COP) expects 2025 to be its biggest year for long-cycle spending, hitting around $3 billion. After that, a wave of new projects will come online from 2026 to 2029, adding about $3.5 billion in extra cash flow from key developments like NFV Port Arthur, NFS, and Willow. This should raise annual free cash flow by roughly $6 billion compared to 2025. On the shareholder front, COP is set to return $10 billion this year, $4 billion in dividends, and $6 billion in buybacks. The plan is to repurchase all the shares issued for the Marathon Oil deal within two to three years, even if oil prices dip.
According to Insider Monkey’s Q3 data, 66 hedge funds were long ConocoPhillips (NYSE:COP), compared to 72 funds in the prior quarter. Boykin Curry’s Eagle Capital Management was the biggest stakeholder of the company, with a position worth $1.6 billion.
Overall COP ranks 13th on our list of the cheap high dividend stocks to invest in now. While we acknowledge the potential of COP as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than COP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.