ConocoPhillips Analyst: Dividend 'Pays Investors To Wait On Oil Recovery'

Shares of ConocoPhillips COP have declined by 17% over the last six months, lifting its dividend yield to around 6%, "second only to the major oils," according to BofA Securities.

The ConocoPhillips Analyst: Doug Leggate upgraded ConocoPhillips from Neutral to Buy and reduced the price target from $46 to $44.

The ConocoPhillips Thesis: The acquisition of Concho Resources Inc CXO offers ConocoPhillips cost-saving opportunities and lower exploration capital in some areas, Leggate said in a Monday upgrade note.

These developments signal “another round of asset sales, presumably in a better oil environment,” the analyst said. 

On a standalone basis, ConocoPhillips' third-quarter "proved its break-even metrics," he said, with operating cash flow balancing its capital expenditures and dividends. 

“Our Buy rating on COP is anchored on two issues, a value dislocation at strip oil prices and 6% yield that pays investors to wait on an oil recovery against a conservative balance sheet relative to the peer group.”  

COP Price Action: Shares of ConocoPhillips were trading 5.24% higher at $30.12 at last check Monday.