Sunday, March 30, 2014

Dividends & Income Conoco Phillips COP 9.6% average dividend growth.

I have found my next 2014 Dividend Machine.

This stock’s average annual dividend increase over the past five years was 9.36%.   Since it also sports a current dividend yield of 3.98%, has earnings that far exceed the dividend payout and a debt to equity ratio of .4159, this stock is a 2014 dividend machine.

Conoco Phillips, (COP) Dividend Machine Fundamentals

COP closed at $70.35 on Friday, March 28.  COP paid a $.69 dividend on March 3, 2014.   That is a yield of 3.98%.    This year I need more income and I am looking for at least 3.5% yield.   COP definitely exceeds that hurdle.

Since 2008, COP’s earnings per share have been consistently higher than the dividend paid out.   During the most recent four quarters. COP’s earnings outpaced dividends by $7.38 to $2.73.

In addition to increasing the minimum yield I receive, I also want to invest for income growth.   2014 Dividend Machines must, therefore, show me that over the past five years dividend increases were at least 4% per year.   

COP on average has increased the dividend an average of 9.36% per year.  In 2009 the quarterly dividend was $.47 and five years later it is $.69.    Usually, a stock that qualifies as a Dividend Machine will have increased the dividend every year.   This is not true for COP.   During 2011 and 2012 the dividend held steady but then increased enough to deliver more than 9% per year. 

The table below presents COP’s dividend machine fundamentals.


My Concerns about COP

Judicious execution of my dividend machine strategy requires that I ignore that COP is trading just off the 52 week high.   Actually, COP is trading just off the 5 year high.  But I must stick with my strategy because so far the past three years of picking dividend machines using my four criteria while I ignored other factors like 52 week highs has worked out well.   Therefore, COP will be a 2014 Dividend Machine.


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