Will ConocoPhillips Raise Its Dividend in 2018?

11/30/17

By Dan Caplinger, Motley Fool

The energy industry has been tough on oil and gas exploration and production companies for the past few years, but a recent rise in oil prices has finally started to help out big players like ConocoPhillips (NYSE:COP). Back in 2016, ConocoPhillips had to cut its dividend dramatically, leaving shareholders with just a third of what they had received in dividends before the move. Now, investors are seeing signs of renewed strength, but despite one encouraging move on the dividend front, the company hasn't been in a big hurry to restore its payout to anywhere close to what it paid previously. Let's take a closer look at ConocoPhillips to see whether it's likely to hike its payout in 2018, and if so, by how much.

Dividend stats on ConocoPhillips

Current Quarterly Dividend Per Share$0.265
Current Yield2.2%
Number of Consecutive Years With Dividend Increases Prior to 2016 Cut15 years
Payout RatioN/M
Last IncreaseFebruary 2017

DATA SOURCE: YAHOO! FINANCE. LAST INCREASE REFERS TO EX-DIVIDEND DATE. N/M = NOT MEANINGFUL; CONOCOPHILLIPS HAD NEGATIVE EARNINGS OVER THE PAST 12 MONTHS.

The rise and fall of ConocoPhillips' dividends

Throughout most of its history, ConocoPhillips has been extremely good to its shareholders by paying regular and growing dividends. Long periods of weak oil prices in the 1990s and early 2000s had the company simply keeping its dividend payments unchanged for the most part, but even then, occasional increases kept shareholders interested in the company's future.

After Conoco and Phillips merged to form the current version of the company in 2002, the oil giant started making more consistent increases. For 15 straight years, ConocoPhillips investors enjoyed higher annual total dividend payments, even though they went through occasional periods of more than a year during which the company chose not to make quarterly increases. Cyclicality in the energy markets persisted, but a couple of periods of oil prices at $100 or more per barrel helped to shore up ConocoPhillips' operations and produce strong profits.

COP Dividend Chart

COP DIVIDEND DATA BY YCHARTS.

However, that all came to an end in the mid-2010s, when crude plunged below $30 per barrel at its worst levels. Sustained prices below $40 per barrel prevented ConocoPhillips from producing profits at anywhere near the rate it had previously. After a long struggle to find a way to sustain its payout, ConocoPhillips finally pulled the plug in early 2016, as it became clear that crude wouldn't rebound as quickly as many had hoped. Company executives admitted that they would need to account for the negative financial impact of extremely low oil prices for the long run, and that resulted in their deciding to make a reduction of nearly two-thirds in ConocoPhillips' dividend.

Energy facility with storage tanks surrounded by forest and a river.

IMAGE SOURCE: CONOCOPHILLIPS.

2017 was slightly more favorable for ConocoPhillips. Oil prices rebounded somewhat, and that led ConocoPhillips to give shareholders back a bit of what it had taken away. Yet the 6% rise to $0.265 per share on a quarterly basis represented just the tiniest of boosts compared to the magnitude of the previous year's cut, showing just how far the oil market has to go in order for ConocoPhillips to return to its past glory.

Will ConocoPhillips keep bouncing back?

Investors should be optimistic about the efforts that ConocoPhillips has made to improve its operations. Strategic moves to boost oil exposure over natural gas and to focus on core business areas should help contribute to greater profits, and asset sales have already helped to shore up the energy giant's balance sheet.

At this point, dividend increases are more symbolic, and so it wouldn't be surprising to see another token mid-single-digit percentage increase come early in 2018. For those still reeling from the 2016 payout cut, however, a few extra pennies won't do much to return ConocoPhillips to their good graces in the foreseeable future.

Forget ConocoPhillips: These are the best dividend stocks to buy now If you're looking for solid income from dividend stocks, look no further. The Motley Fool's top dividend analyst, who leads our dividend stock newsletter, Income Investor, just picked what he believes are the best income stocks in the market right now… and ConocoPhillips didn't make the list!

These dividend cash cows could be the latest in a long string of market-beating stocks Income Investor has picked over the years.

Click here to get access to the full list!

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

This Stock Could Be Like Buying Amazon in 1997Imagine if you had bought Amazon in 1997… a $5,000 investment then would be worth almost $1 million today.

You can't go back and buy Amazon 20 years ago… but we've uncovered what our analysts think is the next-best thing: A special stock with mind-boggling growth potential.

With hundreds of thousands of business customers already signed up, this stock has been described as "strikingly similar to an early Amazon.com."

To learn more about it, click here.

It's on us. Share your news here.

Submit your stories and articles to citybizlist today.