Buy ConocoPhillips (COP)?

A look at peers

First of all, Phillips 66 (NYSE:PSX). The spin-off has been hugely beneficial for the shareholders as the stock has gone up by almost 81% since the spin-off took place. The company has been growing since the spin-off and recently announced the plans to develop a natural gas liquids (NGL) fractionators in Old Ocean, Texas. The facility will have a capacity of 100,000 barrels per day and will be close to the company’s Sweeny refinery. The export of NGL over the next decade should open new doors for the company to grow, and the current transportation and storage infrastructure of Phillips 66 in that region should be ideal for the new fractionators.

Another energy giant, Exxon Mobil Corporation (NYSE:XOM), announced its quarterly earnings in the last week, beating analyst estimates by $0.07 – the company reported earnings per share of $2.12 per share. Exxon’s impressive earnings indicate that Phillips 66 might also report better than expected earning as the company has a substantial refinery business. Exxon Mobil Corporation (NYSE:XOM) itself is expected to grow as it recently started production at its Kearl Oil Sands project in Alberta – the project is expected to produce 4.6 billion barrels of oil equivalent over the next 40 years. The project will produce 110,000 barrels per day, a solid addition to already impressive production levels.

Conclusion

ConocoPhillips (NYSE:COP) is one of the best picks in the sector for both income and growth investors – the company pays an attractive dividend yield of over 4.50%. Its spin-off, Phillips 66, is also a solid investment for growth investors as the refinery business is growing at a faster pace than the exploration business. However, Phillips 66 has less than attractive dividend yield of just 2%. In my opinion, energy sector is set to grow over the next decade, which makes it one of the most attractive sectors.

The article Why You Should Buy ConocoPhillips originally appeared on Fool.com and is written by Ishtiaq Ahmed.

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