As oil prices are hovering around $100 a barrel, and oil company stocks have recently tested their all-time highs. If we look at stock performance from a technical perspective, we can see obvious multiple-top formations in the charts of many oil stocks. Though stocks could not break individual resistance levels, and retreated, the long-term trend is obvious. If we experience a global recovery, demand for oil will go higher, which will naturally boost big oil profits. Here, is a diversified list of prominent oil companies paying substantial dividends but offering low P/E ratios.
Conoco Philips (COP): Conoco Philips is the third largest incorporated energy company in the USA based on market cap, oil and natural gas reserves. The company has a market cap of $102.76 billion. Conoco Philips is the fourth-largest refiner and the sixth-largest reserves holder of non-government controlled companies in the world. It operates in more than 30 countries. Conoco Philips has a P/E ratio of 8.75, and is offering a 3.63% dividend yield. The company supports a Beta of 1.16. Forward P/E ratio for next year falls to 8.20. COP was able to double its dividends per share in the last 5 years. In 2005, shareholders received $0.31 per share; the company paid $0.66 for each share in this quarter.
Eni Spa (E): The Italian oil giant operates in the oil and gas business, electricity generation and sale, petrochemicals, oilfield services, construction and engineering industries. The company has a market cap of $98.37 billion. Eni operates in 77 countries with a staff of about 78,400 employees. Its P/E ratio is 9.48, dividend yield is 5.58%. The company has an outstanding dividend history. Its dividend yield increased from 3.2 to 5.53% in the last 10 years. Moreover, Eni’s dividend payout ratio increased rapidly over the last 10 years. In 2000, the ratio was 28.8, by 2009 it went up to 70. While that might look like a warning sign for many, I prefer the high payout ratio. Money in my pocket is better than money somewhere else. Although Eni Spa’s total liquid and gas production decreased by 8.6% in the first quarter due to interruption in Libya, the company reported an EPS increase of $1.38 to $1.67 in the first quarter of 2011.
Petro China Company (PTR), the Chinese titan is the largest oil and gas producer and distributor in China. In its domestic market, it plays an important role in the oil and gas industry. Market cap is $249.07 billion, and P/E ratio is 11.27. Ttm [trailing twelve month] dividend yield is 3.79%. Expected P/E ratio falls to 9.11 in the next fiscal year. Last month, the company announced a record profit of 139.87 billion RMB [$21.4 billion]. I think U.S. investors will not only benefit from the growth, but also from the appreciation of the Chinese yuan against the USD.
Petroleo Brasileiro SA (PBR) is the third biggest energy company in the world, and the biggest in Latin America. It has a presence in 28 countries. Petroleo Brasileiro has a market cap of $216.57 billion, P/E ratio of 8.59, and forward P/E ratio of 9.23. Its Ttm dividend yield is 3.55%. Furthermore, the company has good a good current ratio of 1.90. The company's 5 year net income growth rate is 13.50%, net profit margin is %16.22. Quarterly net income rose from $4.32 billion in 2010 to $6.7 billion in 2011.
Royal Dutch Shell PLC (RDS.A) (RDS.B), headquartered in the Netherlands, RDS.A is a worldwide energy and petrochemical producer. It operates in more than 90 countries. 48% of its production is natural gas, and every day Shell produces 3.3 million barrels of gas and oil. It has more than 30 refineries and plants all over the world. Shell sold 16.8 tons of LNG and 145 billion liters of fuel in 2010. The market cap, P/E ratio and dividend yields stand at $222.1 billion, 9.28 and 4.80%, respectively. In the last 5 years, dividend payment per share increased 2.5-fold; from $0.69 to $1.61. According to the company's latest announcement, Shell has concluded its final investment decision on the Prelude Floating Liquefied Natural Gas (FLGN) project in Australia. The company will build the first FLGN facility of the world with this project.
Norway-based Statoil S.A. (STO) is an international energy company with operations in 34 countries. In just a few years, Statoil has positioned itself as a significant player in the exploration and development of oil and gas deposits in the Gulf of Mexico. Its market cap is $83.73 billion; P/E ratio is 10.81, and dividend yield is 4.20%. The expected P/E ratio falls to 8.21 for the next year. In 2001, the company paid $0.78 dividend per share. In the first quarter of 2011, Statoil ASA increased net operating income by 28% and net income by 44% compared to the first quarter of 2010.
Total S.A. (TOT), a French multinational, is one of the six super major oil companies in the world. Its business covers the entire oil and gas chain, from crude oil to natural gas exploration and production to power generation, transportation, refining, petroleum product marketing and international crude oil and product trading. Total S.A. has a market cap of $135.85 billion. The company’s P/E ratio is 7.70, and forward P/E ratio is 7.02. Its dividend yield is 4.72%. Last week, Total reported that its adjusted net income was $4.44 billion in the first quarter of 2011, 35% higher than the first quarter of 2010.
Chevron Corporation (CVX) is another big American corporation, operating in more than 180 countries around the world. Chevron ranked among the top 5 largest corporations in USA based on Fortune's 500 list. Its market cap is $208.80 billion. The company’s P/E ratio is 10.08, and forward P/E ratio is 8.03. Its beta value of 0.76 is the lowest value of any company on this list, implying less stock volatility than other global titans. The dividend yield is 3.00%. The most recent dividend is $0.78 payable by June 10th. Chevron Corporation announced last week that it signed a sales and purchase agreement with JX Nippon Corporation. According to a managing director of Chevron, this agreement commercializes their equity in Australia and demonstrates Chevron’s ability to meet long term demand growth in Asia-Pacific.
YPF S.A. (YPF), is an Argentinian oil and gas company that has operations in 29 countries. It has a market cap of $17.44 billion. The P/E ratio is 12.29, and forward P/E ratio is 11.03. YPF has one of the highest dividend yields and net profit margins on the list, 7.17 and 13.11% respectively. The company announced, on May 10th, that it discovered oil deposits of approximately 150 billion barrels in southwestern Neuquen, Argentina.
Seadrill (SDRL) is listed as a Bermuda-based company. However, the company has global operations throughout the world. Seadrill’s dividends are highly discretionary. According to Morningstar, the company offered $1.75 (23.03%) in 2008, $0.5 (1.96%) in 2009, and 2.228 (6.57%) in 2010. This year, the company paid $0.63 per share so far. Seadrill has a gross margin of 55.9%, operating margin of 40.2%, and net margin of 27.64%.
Note that many foreign states take a large cut from a company's dividends. Depending on your tax status, you might or might not claim a tax deduction. One strategy to use is selling right before a stock goes ex-dividend. You can find more information on one-shot dividend play, here.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.