05-13-2013, 03:16 PM
I think those are both solid adds, and if you currently have neither, it is kind of a win-win scenario. You could also of course pick up some of each. That said, I tend to agree with your leaning toward COP.
Probably what carries the day for me, if I had to choose, is the COP’s dividend yield over 4 percent as compared to XOM’s under 3 percent. I also think of COP as a smaller company, which may mean it can be more nimble. After the PSX spinoff it is doing a lot of restructuring of its assets which could really pay off in a few years.
P/E and earnings growth are in the same ballpark for the two. XOM’s payout ratio in the mid-20s is nicer than COP’s in the low 40s, but both are in the “very comfortable” range for me.
The one area where XOM fares well in this comparison is dividend growth and consistency. XOM has raised the dividend consistently each year for 30 years, and you can count on them to do it again this year, with a five-year dividend growth rate in the 9 to 10 pecent range. COP on the other hand, had a good 11 or 12-year streak coming into 2012. Although technically the dividend was not raised in 2012, I give them credit for a 2012 raise because the PSX spinoff reduced the income base, and if you were holding shares of COP at the time, you received shares of PSX with its own dividend, which in my mind counts as a healthy raise from COP in 2012. But whether COP will raise the dividend to keep the streak going in 2013 is anybody’s guess. Tim McAleenan has a good run-down of the issue here.
All in all, I’d say you’re fine either way. But I find the higher starting yield of COP compelling, and I trust that over time, the dividend will be increased.
Probably what carries the day for me, if I had to choose, is the COP’s dividend yield over 4 percent as compared to XOM’s under 3 percent. I also think of COP as a smaller company, which may mean it can be more nimble. After the PSX spinoff it is doing a lot of restructuring of its assets which could really pay off in a few years.
P/E and earnings growth are in the same ballpark for the two. XOM’s payout ratio in the mid-20s is nicer than COP’s in the low 40s, but both are in the “very comfortable” range for me.
The one area where XOM fares well in this comparison is dividend growth and consistency. XOM has raised the dividend consistently each year for 30 years, and you can count on them to do it again this year, with a five-year dividend growth rate in the 9 to 10 pecent range. COP on the other hand, had a good 11 or 12-year streak coming into 2012. Although technically the dividend was not raised in 2012, I give them credit for a 2012 raise because the PSX spinoff reduced the income base, and if you were holding shares of COP at the time, you received shares of PSX with its own dividend, which in my mind counts as a healthy raise from COP in 2012. But whether COP will raise the dividend to keep the streak going in 2013 is anybody’s guess. Tim McAleenan has a good run-down of the issue here.
All in all, I’d say you’re fine either way. But I find the higher starting yield of COP compelling, and I trust that over time, the dividend will be increased.