13 Best Natural Gas and Oil Dividend Stocks To Buy

4. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders: 62

ConocoPhillips (NYSE:COP) is a Texas-based energy company that develops and produces crude oil and natural gas globally. The US oil and gas industry has been experiencing a wave of consolidation as companies aim to enhance their reserves and achieve economies of scale. ConocoPhillips (NYSE:COP) is also participating in the sector’s trend of mergers and acquisitions. Recently, it has agreed to acquire Marathon Oil (MRO) for $22.5 billion and expects to achieve cost savings of $500 million within the initial full year following the completion of the transaction. In addition, the acquisition contributes over 2 billion barrels of reserves to its portfolio.

We believe that ConocoPhillips (NYSE:COP) is poised to benefit from this acquisition. The company mainly emphasizes maintaining a low production cost and diversifying its asset base to generate free cash flow (FCF) consistently, even during periods of low oil and gas prices. It is recognized for its capital allocation strategies. Marathon’s cash generation business model provides ConocoPhillips (NYSE:COP) with additional capital, allowing for more strategic investment opportunities. In its recent earnings report, the company announced that it plans to return $9 billion to shareholders through 2024. In Q1 2024, the company generated $5 billion in operating cash flow and its cash from operations came in at $5.1 billion. It distributed $2.2 billion to shareholders during the quarter through dividends and share repurchases.

ConocoPhillips (NYSE:COP) reported growth in its production in the first quarter of 2024 to 1,902 thousand barrels of oil equivalent per day (MBOED), from 1,792 MBOED during the same period last year. The company reported a decline in its earnings due to impacts from lower prices and higher costs, which were partially mitigated by higher volumes.

ConocoPhillips (NYSE:COP) is one of the best dividend stocks on our list as the company has been rewarding shareholders with growing dividends for the past nine years. It currently pays a quarterly dividend of $0.58 per share and has a dividend yield of 3.40%, as of June 10. The stock’s forward P/E ratio of 12.39 suggests that it may be cheap relative to its earnings outlook. Street analysts have maintained a consensus Strong Buy rating on COP with an average price target of $147.2, which reflected a 30% upside potential.

The number of hedge funds tracked by Insider Monkey owning stakes in ConocoPhillips (NYSE:COP) grew to 62 in Q1 2024, from 59 in the previous quarter. The total value of these stakes is more than $4.4 billion. Among these hedge funds, Eagle Capital Management was the company’s leading stakeholder in Q1.