ConocoPhillips: 4 Reasons To Buy This Top Dividend Growth Stock

| About: ConocoPhillips (COP)

The hunt for dividends is likely to continue for at least a couple more years, since the Federal Reserve is poised to keep rates low, in order to boost the fragile economy. The demand for dividend stocks has pushed yields lower. However, there are still stocks that offer a strong yield, plus a history of significant dividend growth. ConocoPhillips (NYSE:COP) has a yield that will top most stocks and even many energy sector peers. A solid yield is important, but so is dividend growth, and this company offers both. Here are 4 reasons to consider buying shares of this oil and gas giant now:

1) ConocoPhillips recently announced that it would sell a joint venture stake in Russia. This deal is expected to lead to gains of about $400 million on an after-tax basis, and it is consistent with the ongoing goals of the company which has it targeting asset sales of $15 billion to $20 billion by the end of 2012. The asset sales and the spinoff of Phillips 66 (NYSE:PSX) earlier this year allows the company to reduce debt and stay more focused on exploration and production.

2) ConocoPhillips has a consistent history of paying dividends and the distribution has more than doubled from 31 cents in 2005, to a quarterly dividend of 66 cents per share in 2012. Dividends could be poised to keep rising in the future because earnings estimates are more than double the dividend payout.

3) ConocoPhillips recently reported solid financials. For the second quarter of 2012, it earned $2.3 billion, or $1.80 per share, compared with second-quarter 2011 profits of $3.4 billion, or $2.41 per share. However, the earnings in 2012 were reduced due to the spinoff of Phillips 66.

4) ConocoPhillips shares offer value when compared to its peers. It trades for just about 10 times earnings which is in line with other major oil companies like Chevron (NYSE:CVX) and Exxon (NYSE:XOM). However, it pulls ahead of those stocks in terms of the dividend since it yields 4.6%, while Exxon yields just 2.6% and Chevron comes in at 3.2%.

Here are some key points for COP:
Current share price: $56.40
The 52 week range is $50.62 to $78.29
Earnings estimates for 2012: $5.43 per share
Earnings estimates for 2013: $5.59 per share
Annual dividend: $2.64 per share which yields 4.6%

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informational purposes only. You should always consult a financial

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.