Oil stock Dividend Analysis (COP, OXY, XOM)

By: ispeculatornew
Date posted: 05.12.2011 (5:00 am) | Write a Comment  (4 Comments)

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Earlier this month, we published a list of the top dividend stocks in the S&P500 based off of the dividend yield only. Of course, that is only useful to some extent. Current dividend yield is a small part of what makes a stock solid enough to be included in your passive income portfolio. A few days later, in our free newsletter, we did some filtering in order to find the best stocks based on potential for long term growth. That search gave us 13 results. Some of them are being looked at more closely in the newsletter, others have been reviewed recently on the website (such as Intel-INTC, Coca-Cola-KO) but there are still a few interesting ones that we will look at. Today, we decided to look at the 3 oil-related stocks to make the list, in order to find the most promising and solid one and also see if any of them could/should be included in your portfolio in order to help you retire when you want.

As you can imagine, we will be looking at the three stocks based off of the 20 things that we look at when evaluating dividend stocks. Let’s get going without further wait:

Dividend Metrics

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Conoco Phillips (CON)

Exxon (XOM)

Occident Petroleum (OXY)

Wow, what I can say is that on the surface, the 3 companies have very attractive profiles. They all have a reasonable dividend yield and two of them have double digit 1 year and 5 years dividend growth. If I would have to rank them, I would say that COP is the top rank here with OXY coming in 2nd and XOM in third. But honestly, I think at this point, they all could qualify as great dividend plays in a passive income portfolio.

Company Metrics

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On the surface, these companies look fairly similar. They have similar sales growth both in the short and long term, while Occidental Petroleum has been showing very impressive earnings growth. However, that comes at the price of a higher P/E. The payout ratio of all 3 companies is very solid and while Conoco Phillips has higher debt, it is still very reasonable. I would personally give them all high grades in terms of their financials. Seeing OXY and XOM having basically no debt would perhaps put them slightly higher but barely so.

Stock Metrics

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Industry Metrics

These companies are all diversified players in the oil sector. OXY seems to be more concentrated in the exploration phase which is becoming more expensive and is certainly more risky but the continued high prices in oil certainly makes oil discovery more profitable and easier.

Fit within your portfolio

Yesterday I did discuss the importance of having some exposure to commodities in any long term portfolio and it would certainly seem like buying at least one of these companies would a whole lot of sense. As to which one (s)? It’s much more difficult than it has been in past matchups I must admit and I would have to say that the three of them represent potential buys depending on the number of stocks that you own in your passive income portfolio. I’d feel very comfortable having 1 out of 10 stocks be “oil” stocks so a 20 stock portfolio could easily hold 1 or 2 of these names.

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4 Comments

  1. Pingback by Dividend Link Time — May 13, 2011 @ 6:02 am

    […] Oil stock Dividend Analysis (COP, OXY, XOM) @ […]

  2. […] week, we did an analysis of 3 dividend stocks from the oil sector. All 3 of those companies had made our select group of companies poised for big things in terms of […]

  3. […] the past few weeks, we did an analysis of 3 dividend stocks from the oil sector and of JM Smucker (SJM) which turned out to be a great dividend play. All of those companies had […]

  4. Comment by Bryan — September 26, 2011 @ 2:16 pm

    What are your thoughts at XOM at the current price point? Is the demand for oil really going to decline with electric vehicles? XOM is trading at a historical low P/E 9.50. Its dividend growth alone may make it worthy of investing but it has not returned very much the past 4-5 years in price appreciation.

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