I started a small position in ConocoPhillips (COP) last week and I will consider adding to it if the share price/ oil price continue to fall as I believe it will rebound eventually . In the meantime, ConocoPhillips has a great dividend of 4.63% and the payout is about 50% so there’s a decent margin of safety there for the dividend.
I think ConocoPhillips being one of the larger players in oil should allow it to survive a prolonged lower price in oil and allow it to be stronger once the price of oil rebounds as weaker competitors are consolidated.
Here is what to like about ConocoPhillips:
- High dividend with low payout.
- Low cost of supply – meaning it can handle lower prices in oil better than competitors.
- Plenty of cash to maintain operations and dividend.
- Great balance sheet and credit rating.
- More upside in stock price due to current pessimism in the oil industry.