This
post discusses Conoco Phillips, symbol COP.
I am long COP and it has been a Dividend Machine multiple times in the
past. Should you buy COP for the income
producing portion of your portfolio?
COP
Dividend Machine History
2011
On
May 6, 2011, COP was the 26th Dividend Machine I profiled for the
2011 Dividend Machine model portfolio.
Had you bought then, you would have paid $71.43. Your dividend income would have been $2.64 on
earnings of $8.30. Dividend yield was
3.695%. Debt to equity ratio was .33 and
earnings (EPS) were $8.30. http://www.themoneymadam.com/2011/05/dividend-machine-conoco-philips-symbol.html
2012
On
May 1, 2012 COP spun off PSX the refining portion of the business. You would now own 100 shares of PSX and 100
shares of COP.
2013
On
April 9, 2013 Conoco Philips was again picked to be included in a Dividend
Machine Portfolio. COP’s price at that
time was $59.84. Dividend was $2.64 on
earnings of $6.69 for a yield of 4.41%.
D/E ratio was .45. http://www.themoneymadam.com/2013/04/conoco-phillips-cop-dividend-machine.html
2014
On
March 27, 2014 Conoco Philips made the grade again and was added to the 2014
Dividend Machine model portfolio at a price of $80.35. Earnings were $7.38, dividends $2.73 for a
yields of 3.92%. D/E was .4156. http://www.themoneymadam.com/2014/03/dividends-income-conoco-phillips-cop-96.html
Discussion
of COP Dividend Machine History
The
2011 investment of $7,143 is now worth COP 100 shares times $65.66 plus 100
shares of PSX at $79.56 or $14,522.
Nice capital gain! Moreover,
Dividend income of $264 per year has now increased to $292 from COP plus $200
from PSX for a total of $492. Nice
income increase!
The
2013 investment has done well but not as well as 2011. But then nearly every stock bought in 2011
has delivered good gains. The 2013
investment of $5,984 in COP would be worth $6,566 today. The dividend would have increased from $2.64
to $2.92; an increase of 10.6%. Do you
have another investment you made in 2013 just 22 months ago that increased your
income by 10.6%?
The
2014 investment in COP is losing money.
While COP met all the Dividend Machine criteria when I wrote about it,
the price of oil has killed this sector. Your investment of $80.35 would be worth
only $65.66 or a loss of 18.28%: ouch!.
Your dividend of $273 would have increased to $292 for an increase of
6.959% in less than a year.
Should
you buy COP today?
I
write about the stocks I buy for the income producing portion of my portfolio
and when those stocks meet all four of my Dividend Machine criteria, I add that
stock to the current year’s model portfolio. I will add COP to the 2015 Dividend Machine model portfolio.
Sale
is one of my favorite words when I shop and COP is on sale while it meets all
the Dividend Machine criteria for 2015.
I will be adding to my COP holdings but I will use the volatility of the
energy market to also sell calls on the new shares. This additional income will help salve my
wounds from the 2014 buy.
The
tables below present COP’s Dividend Machine Fundamentals and the covered call I
will sell today.
Dividend Machine Fundamentals:
Covered Call Option
Dividend Machine Fundamentals:
Covered Call Option
Yes,
I think you should consider COP for income producing portion of your portfolio.
TheMoneyMadam
Disclosure: Long COP + May, 2015 calls
Disclosure: Long COP + May, 2015 calls