Build Diversity: Part 4 Energy

16 Mar 2014 14:45
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All stock information will be culled from David Fish’s “Dividend Champions List” at http://dripinvesting.org/ which provides a list of all stocks that have continually grown their annual dividend payouts for 5 years or more in a row.

Welcome to Part 4 of our “Build Diversity” series. Today we will be looking at the Energy sector.

To start with a list we will use basic search criteria of:

  • min div yield 2.5% or greater
  • payout ratio less than 65%
  • debt to equity ratio less than 1
Company Symbol Yrs of Div Growth Div Yield Payout Ratio TTM P/E Debt/Equity
Chevron CVX 26 3.47% 36.10% 10.41 0.13
China Petroleum & Chemical SNP 5 4.48% 24.69% 5.52 0.59
ConocoPhillips COP 13 4.15% 42.86% 10.33 0.42
ExxonMobil XOM 31 2.61% 34.19% 13.08 0.13
Helmerich & Payne Inc. HP 42 2.53% 36.98% 14.61 0.04
Occidental Petroleum OXY 12 2.98% 50.09% 16.79 0.18

The search yielded 6 stocks. For companies that have increased dividends for more than 20 consecutive years we have HP, XOM, & CVX. For payout ratios, only OXY squeaks in just above 50% but even at these levels there is room to grow dividends further. The industry average for valuation is a P/E ratio of 14.63, only OXY is above and HP is about o average.

Looking at average dividend growth, all 6 show significant increases over the last 10 years with HP being the weakest with a 10 year average of 6.1%.

Company Symbol 1 Yr DGR 3 Yr DGR 5 Yr DGR 10 Yr DGR
Chevron CVX 11.11% 11.15% 9.04% 10.55%
China Petroleum & Chemical SNP 8.44% 22.64% 19.84% 14.50%
ConocoPhillips COP 15.50% 17.66% 13.25% 15.70%
ExxonMobil XOM 12.84% 12.24% 9.68% 9.64%
Helmerich & Payne Inc. HP 7.70% 11.90% 9.20% 6.10%
Occidental Petroleum OXY 18.27% 18.72% 15.25% 16.81%

Our quick search has yielded 6 potentially attractive examples to add to your portfolio. Like any investment you should research further before purchasing any equity as this report is nothing more than a result of some surface level values and ratios.

Chevron (CVX): Chevron Corporation, through its subsidiaries, is engaged in petroleum, chemicals, mining, power generation, and energy operations worldwide. The company operates in two segments, Upstream and Downstream.

China Petroleum & Chemical (SNP): China Petroleum & Chemical Corporation, an energy and chemical company, through its subsidiaries, engages in the oil and gas, and chemical operations in the People’s Republic of China.

ConocoPhillips (COP): ConocoPhillips explores for, develops, and produces crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. Its portfolio includes North American shale and oil sands assets; legacy assets in North America, Europe, Asia, and Australia; various international developments; and exploration prospects.

ExxonMobil (XOM): Exxon Mobil Corporation explores and produces for crude oil and natural gas. As of December 31, 2013, the company had approximately 37,661 gross and 31,823 net operated wells. It also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene, polypropylene plastics, and specialty products; and transports and sells crude oil, natural gas, and petroleum products.

Helmerich & Payne Inc. (HP): Helmerich & Payne, Inc. primarily operates as a contract drilling company in North and South America. It provides drilling rigs, equipment, personnel, and camps on a contract basis to explore for and develop oil and gas from onshore areas and fixed platforms, tension-leg platforms, and spars in offshore areas.

Occidental Petroleum (OXY): Occidental Petroleum Corporation is engaged in the acquisition, exploration, and development of oil and gas properties in the United States and internationally. The company operates in three segments: Oil and Gas; Chemical; and Midstream, Marketing and Other.

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