My Top Upstream Oil and Gas Dividend Stock to Buy in November (and It's Not Even Close)

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].