Marathon Petroleum Corp (MPC), ConocoPhillips (COP): Are Oil Refiners a Dangerous Investment Right Now?

A refuge for skittish investors
Those who aren’t willing to wait for the dust to settle within the refining space could consider ConocoPhillips (NYSE:COP). The former parent company of Phillips 66 is now immune to poor refining results, and its heftier dividend yield and more stable performance may be attractive to risk-averse investors.

ConocoPhillips (NYSE:COP) yields in excess of 4.2% at recent prices and reported strong first-quarter operating results. The company realized 3% growth in adjusted earnings per share through the first three months of the year. Moreover, it directs investors to the progress being made on several of its growth priorities, including two significant oil discoveries in the Gulf of Mexico.

Don’t let poor short-term results scare you away
For investors who simply don’t want to take the risk of refiners’ results deteriorating further but still want exposure to the oil space, they could opt for a stock like ConocoPhillips (NYSE:COP).

At the same time, since oil prices can be volatile and it’s extremely difficult to anticipate future price direction, it’s likely the poor refining environment is a short-term issue. Phillips 66 and Marathon Petroleum Corp (NYSE:MPC) are high-quality businesses and are likely to remain resilient.

As an added dose of confidence, both Phillips 66 and Marathon Petroleum Corp (NYSE:MPC) increased their dividends earlier this year by 25% and 20%, respectively. Their strong commitment to returning cash to shareholders serves as a meaningful margin of safety. Management teams of these refiners are clearly bullish on the long-term prospects for their companies, and investors should be as well.

The article Are Oil Refiners a Dangerous Investment Right Now? originally appeared on Fool.com and is written by Bob Ciura.

Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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