ConocoPhillips (COP), Phillips 66 (PSX): Are These Spinoffs Investment Worthy?

The bottom line

Spin-offs are often successful in being accretive to shareholders on the basis that the sum of the parts is greater than the whole. This has certainly been true in the case of both Phillips 66 (NYSE:PSX) and AbbVie Inc (NYSE:ABBV), which were spun off from their parent companies and have rocketed higher now that they are independent, publicly traded stocks.

In this situation, investors should determine what they value most from their investments. Income investors who require a high level of yield from their stocks would be better served buying ConocoPhillips (NYSE:COP), which offers a dividend yield of 4.5%. While Phillips 66 (NYSE:PSX) is growing significantly faster than its former parent, its dividend yield is less than half of ConocoPhillips’, and its results are likely to be more volatile.

While AbbVie Inc (NYSE:ABBV) provides a higher dividend yield than its parent Abbott Laboratories (NYSE:ABT) (3.5% versus 1.5%), it is heavily reliant on its major drug Humira.

At this point, it seems that both of the newly spun-off entities are worthy of investment, as they are growing extremely quickly. The parent companies are likely to be more slow-and-steady, which may be appropriate for more conservative investors. In either case, investors in these stocks are likely to enjoy rising profits and dividends for many years to come.

Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Are These Spin-Offs Investment Worthy? originally appeared on Fool.com.

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