ConocoPhillips (COP) has revealed a 2.4% increase in its quarterly dividend from 42 cents per share to 43 cents per share, equating to an incremental $43 million in annual dividend payments.
This translates into a forward dividend yield of 4.78%. The dividend is payable on Dec. 1, 2020, to stockholders of record at the close of business on Oct. 19, 2020.
Shares in COP have plunged 46% year-to-date, but the oil and natural gas giant nevertheless scores a Strong Buy consensus from the Street. That’s with 12 recent buy ratings vs just 2 hold ratings. Meanwhile the average analyst price target of $48 indicates 37% upside potential lies ahead.
“The dividend increase, coupled with the recently announced restart of the share repurchase program, demonstrate the company’s financial strength and confidence in the macro outlook” cheered RBC Capital analyst Scott Hanold on October 9.
Indeed, at the end of September, COP revealed plans to resume share repurchases of $1 billion during 4Q20 under its existing authorization using cash on its balance sheet. At 2Q20 the company had $14.8 billion of authorizations remaining under its share repurchase program.
As a result, Hanold reiterated his buy rating on COP with a $50 price target (42% upside potential). He noted that COP has the ability to execute these buybacks through most cycles given its significant cash balance and financial strength.
And according to the analyst, “the dividend increase should provide investors with incremental confidence the company can continue to grow free cash flow distributions while funding its future development program.” (See COP stock analysis on TipRanks)
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