The integrated oil majors in the United States are highly profitable companies that reward their shareholders handsomely with profits and dividends that flow year in and year out. And, as oil climbs above $100 per barrel and we enter the peak summer driving season, it’s a great time to reconsider big oil.
A recent dividend increase on top of an already industry-leading dividend yield make ConocoPhillips (NYSE:COP) a buy.
Dividends that lead the pack
ConocoPhillips (NYSE:COP) recently provided its investors with a solid 4.5% dividend increase, which might not sound like much, but ConocoPhillips (NYSE:COP) already yielded above 4% at the time of the announcement.
For long-term investors who understand the value of reinvesting dividends, that combination of yield plus dividend growth means huge rewards over time for patient investors.
Of course, ConocoPhillips (NYSE:COP) isn’t the only integrated oil company that rewards its shareholders handsomely. Industry juggernaut Exxon Mobil Corporation (NYSE:XOM) almost needs no introduction. At its current price, it’s the most valuable publicly traded company in the world, holding a massive $413 billion value by market capitalization.
Despite Exxon Mobil Corporation (NYSE:XOM)’s huge size, its shareholder payout remains relatively low. Exxon Mobil Corporation (NYSE:XOM) yields just 2.75% at recent prices.
It’s true that Exxon Mobil Corporation (NYSE:XOM) has grown its distribution faster than ConocoPhillips (NYSE:COP) in recent years. To illustrate, consider that Exxon Mobil Corporation (NYSE:XOM) raised its dividend 10% this year and 21% last year. This year’s dividend bump represented the 31st consecutive annual dividend increase from Exxon Mobil Corporation (NYSE:XOM). According to the company, its dividend has grown by 6% compounded annually over the past 30 years.
That being said, Chevron Corporation (NYSE:CVX) yields 3.2% at recent prices, still below ConocoPhillips (NYSE:COP)’s yield.
Strong profits mean those dividends will keep rolling in
ConocoPhillips yields in excess of 4.2% at recent prices and reported strong first-quarter operating results. The company realized 3% growth in adjusted earnings per share through the first three months of the year. Moreover, the company directs investors to the progress being made on several of its growth priorities, including two significant oil discoveries in the Gulf of Mexico.
For its part, Chevron Corporation (NYSE:CVX) generated more than $26 billion in profits in fiscal 2012.