Buying ConocoPhillips (COP)

I’m adding 30 shares of ConocoPhillips (COP) on Monday (Dec 1) to the Dividend Geek (Roth IRA) portfolio. Although the portfolio is already overweight in the Energy sector the recent drop in the price of crude oil has created a buying opportunity in Energy companies.

On Thursday Nov 27 Saudi Arabia’s oil minister told fellow OPEC members they must combat the U.S. shale oil boom, arguing against cutting crude output in order to depress prices and undermine the profitability of North American producers. The poorer smaller members of OPEC wanted to cut production to reverse the rapid fall in oil prices.

The OPEC production announcement that they would maintain previous oil production quotes and start a price war with the non-OPEC oil producers caused a strong reaction when major markets opened on Friday after the Thanksgiving holiday which sent any company related to Energy (wind, solar, oil, shale, sand) you name it reeling.

Historically the average time it has taken for oil prices to move from top to bottom has been 6 months and this price decline is at 5 months, so we are closer to the bottom than the top. There’s a good chance that this isn’t over and further price declines are may follow, but I’m willing to buy in now and average down if prices go down lower. For now I’m looking at locking in at the 4.42% dividend yield and 15.5% dividend growth rate as a long term investment in one of the best oil companies in the world that is selling at 17% below it’s current estimated fair value of $80 per share.

Filed in: Dividend Geek Portfolio