ConocoPhillips Has a 3.42% Annual Yield, but Short-Put Investors Can Make 1.5% Monthly

Core Viewpoint - ConocoPhillips (COP) stock is currently undervalued, with a price target of $126.65, representing a potential upside of at least 29% based on its dividend yield of 3.42% [1][6]. Dividend Yield and Price Target - COP's current dividend yield of 3.42% is significantly higher than its 5-year average yield of approximately 2.653% [5][6]. - The stock's price target of $126.65 is derived from the annual dividend per share (DPS) of $3.36 divided by the assumed average yield of 2.653% [6]. - A conservative estimate suggests that if the yield approaches 3.0%, the price target would be $112.00, still indicating a 14% upside from the current price [7]. Recent Stock Performance - COP stock has shown a gradual increase since the company raised its quarterly dividend by 7.69% to 84 cents on November 6, 2025 [3]. - The stock has traded within a range of $90 to $100 over the past two months, closing at $98.19 on January 16, 2026 [1][3]. Investment Strategy - Investors can enhance returns by selling short out-of-the-money (OTM) put options, which could yield approximately 1.5% monthly [1][8]. - A specific strategy suggested involves selling a put contract with a strike price of $88.00, which is 5% lower than the trading price at the time of $92.44 [9].