Core Insights - Companies that pay dividends have significantly outperformed non-payers over the last 50 years, with an average annual total return of 9.2% compared to 4.3% for non-payers, and dividend growers achieving 10.2% [1] Company Summaries ConocoPhillips - ConocoPhillips recently increased its quarterly dividend by 34%, continuing a trend of high dividend growth, with increases of 14% in 2023 and 11% in 2022 [3] - The company aims to be in the top 25% of dividend growth stocks in the S&P 500, supported by accretive acquisitions, high-return capital projects, and share repurchases [3][4] - ConocoPhillips is closing a $22.5 billion acquisition of Marathon Oil, expected to enhance cash flow per share and generate over $500 million in annual cost savings [4] Diamondback Energy - Diamondback Energy has achieved an industry-leading average quarterly compound annual growth rate of 8% for its base dividend since 2018, with a total increase of 620% during this period [5] - The company recently completed its largest acquisition, purchasing Endeavor Energy Resources for $26 billion, which is expected to add 10% to its free cash flow per share next year [6] - Diamondback plans to return at least 50% of its growing free cash flow to shareholders through dividends and share repurchases, while using the remaining 50% to strengthen its balance sheet [6] EOG Resources - EOG Resources has raised its regular dividend by 7%, maintaining a sustainable dividend growth for 27 years, with a nearly 22% compound annual growth rate over the past decade [7][8] - The company focuses on organic growth rather than costly acquisitions, discovering low-cost, high-return oil and gas resources across the U.S. [8] - EOG Resources plans to return more than 100% of its annual free cash flow to shareholders through share repurchases and special dividends, supported by a strong balance sheet [10] Investment Potential - ConocoPhillips, Diamondback Energy, and EOG Resources are positioned for continued high-octane dividend growth, making them attractive options for investors seeking income growth and strong total return potential [11]

ConocoPhillips (COP) , a leading upstream energy firm in terms of production and reserves, is well-positioned to capitalize on handsome crude prices. Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Factors Working in Favor of COPWest Texas Intermediate crude price, trading close to $70 per barrel, is highly favorable for upstream activities.COP secured a solid production outlook thanks to its decades of drilling inventories ...

Group 1 - ConocoPhillips reported better than expected third fiscal quarter earnings, but the overall earnings picture deteriorated due to lower average prices [1] - The energy producer benefited from supportive price actions implemented by OPEC+ members in FY 2024 [1]

Core Viewpoint - Oil companies are generating significant cash flow, allowing them to return substantial amounts to shareholders through dividends and share repurchases, particularly ConocoPhillips and Devon Energy [1][9]. Group 1: ConocoPhillips - ConocoPhillips is projected to return $9 billion in cash to shareholders in 2024, with expectations for even higher returns in 2025 [2][3]. - The company generated over $4.7 billion in cash flow from operations in Q3, covering its $2.9 billion capital needs, and returned $2.1 billion to shareholders during the same period [2]. - ConocoPhillips has a cash-rich balance sheet with $7.1 billion in cash and short-term investments, and an additional $1 billion in long-term investments [3]. - The company has increased its dividend by 34% this year and aims for dividend growth in the top 25% of S&P 500 companies [4]. - Plans to ramp up share repurchases from $5 billion to $7 billion annually, targeting over $20 billion in buybacks in the first three years post-Marathon Oil acquisition [4]. Group 2: Devon Energy - Devon Energy generated $1.7 billion in operating cash flow in Q3 and returned $431 million to investors through dividends and share repurchases [5]. - The company is focusing on share repurchases rather than variable dividends, believing reinvestment at current prices is beneficial for shareholders [6]. - Devon plans to return up to 70% of its free cash flow to investors, emphasizing regular dividends and share buybacks [7]. - The company expects to repurchase shares in the range of $200 million to $300 million each quarter, having already bought back $3 billion since the current authorization [8].

Core Insights - Special dividends provide an additional benefit for shareholders, separate from regular dividends, and are typically larger and irregular [1] - Companies with a history of paying special dividends can be identified, offering insights into potential future payments [2] Costco - Costco has a regular dividend payment of $1.16 per share, with a current dividend yield of approximately 0.5% [2] - The company has paid special dividends in 2015 ($5), 2017 ($7), 2020 ($10), and early 2024 ($15), significantly boosting the overall yield [2] - Including the 2024 special dividend, Costco's yield increases to 2.1%, although it has been declining over time due to a nearly 500% increase in share price since 2017 [3] ConocoPhillips - ConocoPhillips has a dividend yield of 2.82% and has paid special dividends three times in 2024 using a variable return of cash (VROC) [4] - The company has integrated the VROC into its regular dividend, with Q3's regular dividend at $0.78 per share [5] - ConocoPhillips aims to grow its dividend faster than 75% of S&P 500 companies, indicating potential for larger special dividends in the future [6] Ford - Ford has a dividend yield of 5.40% based on a regular dividend of $0.60, which increases to nearly 7% when including a $0.18 special dividend [7] - The company has a history of special dividends, including a significant $0.65 payment in March 2023 [7] - Despite a strong dividend yield, Ford has experienced a total return of -30% over the past three years, underperforming compared to European automakers [8]

Group 1 - U.S. oil company stocks experienced a rise, influenced by the potential return of former President Donald Trump, who is seen as a proponent of increased oil supply [1][2] - ExxonMobil shares increased by 2%, while Chevron shares rose approximately 3%. Smaller companies like Diamondback Energy, ConocoPhillips, and Halliburton also saw gains [2] - Trump has expressed intentions to boost oil production using emergency powers to facilitate new drilling, refinery construction, and other energy projects, promoting a "drill, baby, drill" approach [3] Group 2 - Crude futures initially fell but later recovered slightly, as expectations of increased supply contribute to an existing oil glut and a weak demand outlook, particularly due to China's slowing economy [4] - OPEC+ has extended output cuts for an additional month, yet these measures have not successfully halted the decline in oil prices this year, with major producers like the U.S. and Canada not part of the agreement [5]

Core Viewpoint - ConocoPhillips is positioned as a strong investment opportunity in the oil sector, demonstrating resilience even amid lower oil prices and maintaining robust cash flow and dividend returns [1][2][3]. Group 1: Financial Performance - In the third quarter of 2024, ConocoPhillips produced 1.917 million barrels of oil equivalent per day, with a record-high production of 1.147 million boe/d in the Lower 48 [3]. - Adjusted earnings decreased by 20% year-over-year, with Lower 48 earnings down 26.2%, attributed to a drop in average realized prices from $60.05 per boe in Q3 2023 to $54.18 per boe in Q3 2024 [3][5]. - Despite the earnings decline, ConocoPhillips continues to generate more sales, earnings, and free cash flow than pre-pandemic levels [4]. Group 2: Cost Management and Breakeven - The company has improved its asset quality through disciplined investing, with a free cash flow breakeven around the mid $30 per boe range, expected to decrease to the low $30s due to synergies from the Marathon Oil acquisition [6]. - The dividend adds approximately $10 per boe to the breakeven level, allowing ConocoPhillips to achieve free cash flow breakeven and fund dividends at low $40s per boe [6][7]. Group 3: Capital Return Program - ConocoPhillips announced an acquisition of Marathon Oil for an enterprise value of $22.5 billion and plans to repurchase $20 billion in stock over three years [8]. - In the first nine months of 2024, the company funded $8.8 billion in capital expenditures, repurchased $3.5 billion in shares, and paid $2.7 billion in dividends [8]. - The company increased its share repurchase authorization by up to $20 billion and plans to buy back close to $2 billion in stock in Q4 2024 [9]. Group 4: Dividend Strategy - ConocoPhillips is simplifying its dividend program by eliminating variable dividends and increasing the ordinary dividend by 34% to $0.78 per share, resulting in a forward yield of 2.9% [10]. - The ability to fund an attractive dividend while executing significant stock buybacks reflects the company's strong asset portfolio and financial health [11]. Group 5: Future Outlook - ConocoPhillips is expected to benefit from the integration of Marathon Oil, enhancing its production profile in the Lower 48 [12]. - The company is positioned to continue buying back stock and growing its dividend, providing stability for income investors even in low oil price environments [13].

These energy stocks offer high yielding payouts that they're growing at high rates.Higher-yielding stocks tend to grow slower. That's usually because they don't retain as much cash to fuel their growth.However, that's not always the case. ConocoPhillips (COP 0.95%) and MPLX (MPLX 0.25%) provide investors with the best of both worlds. They pay high-yielding dividends that they're growing rapidly, meaning these energy stocks should have the fuel to produce high-octane total returns in the future. Acquisition- ...

Group 1: Acquisition Details - ConocoPhillips (COP) announced an all-stock acquisition of Marathon Oil Corporation (MRO) valued at $22.5 billion, expected to close in Q4 2024 [3] - The acquisition aims to enhance COP's unconventional oil portfolio, adding high-quality inventory at a low cost, and is anticipated to improve earnings, cash flows, and per-share distributions for shareholders [3] Group 2: Employee Impact - Following the acquisition announcement, Marathon Oil plans to lay off approximately 500 employees from its Houston facility, with notifications to be provided within a month of the merger's close [1][2] - While some affected employees may receive retraining for transition roles, most are expected to face permanent job losses, with over half of the transition roles anticipated to last beyond six months [2] Group 3: Strategic Implications - The merger is seen as a strategic move to expand the companies' portfolios and streamline operations, with both companies sharing values focused on safe operations and long-term shareholder value [4] - The merger is expected to improve performance and reduce operating costs, despite the challenges faced by employees due to layoffs [4] Group 4: Company Rankings - Marathon Oil currently holds a Zacks Rank of 4 (Sell), while ConocoPhillips has a Zacks Rank of 3 (Hold) [5] - Investors may consider better-ranked stocks in the energy sector, such as Smart Sand, Inc. (SND) with a Zacks Rank of 1 (Strong Buy) and Nine Energy Service, Inc. (NINE) with a Zacks Rank of 2 (Buy) [6]

ConocoPhillips is very optimistic about what's ahead.ConocoPhillips (COP -1.55%) is firing on all cylinders these days. The oil giant's legacy business is performing extremely well. Meanwhile, the company is about to get a big boost from closing its needle-moving acquisition of Marathon Oil (MRO -1.55%). Those factors are giving the oil stock the confidence to return a lot more cash to its shareholders. It's boosting its dividend and share repurchase program.Drilling down into ConocoPhillips' third-quarter ...