Energy Business

Why Big Oil With Big Dividends Is the Best Energy Trade Now


This is another large-cap company that offers strong value for investors, and it reports earnings tomorrow. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids worldwide.

Conoco’s portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects.

Many Wall Street analysts feel Conoco can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford, with visibility on future growth from a sizable position in the Permian. Goldman Sachs is very positive and said this when discussing the prospects for big oil:

While we expect upstream oil/gas producers to inflect positively quarter over quarter given stronger pricing realizations as commodity prices recover, we expect refining to act as a headwind and chemicals a tailwind to earnings/cash flow for more integrated companies.

Investors receive a 3.07% dividend. The Goldman Sachs price target is $68, which is lower than the consensus target of $73.86. Conoco stock was closed at $56.06 on Friday.

Exxon Mobil

Shares of this mega-cap energy leader have been on fire, and with people still hitting the road for summer travel and vacations, there could be some big gasoline consumption through Labor Day. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.