5 Basic Material Companies Offering Nifty Dividends

Includes: COP, ENB, MRO, SCCO, WPZ
by: Efsinvestment

Since the last decade, basic material companies have been the outperformers of the market. Moreover, their products are vital for the industrial companies, as well as individuals. As we are experiencing some sort of recovery, I expect these companies to be outperformers for this year as well. Some of these companies offer nifty dividends. Here is a list of five large-cap basic material titans paying excellent dividends and priced with low P/E ratios. All of the companies pay a minimum 3% dividend yield (data derived from Finviz/Morningstar, and is current as of July 17 close):

ConocoPhillips (CPO): COP is to split up its operations in two, which is expected to happen in the Q1 or Q2 of 2012. The oil company, as of July 17, has a $108.02 billion market cap with a P/E of 9.20, and a forward P/E of 8.62. Estimated EPS growth for the next five years is 5.40%, whereas the company had a -4.57% EPS growth during the last five years. With a profit margin of 5.85%, Conoco pays a 3.45% dividend.

The company is doing well since Mar, 2009. $1000 invested in that time is about $2161 now. Debts are decreasing for the last five quarters. COP returned 47.5% in a year. P/S is 0.5, whereas target price implies a 9.5% upside potential. Earnings increased by 158.45% this year, and 50.13% this quarter. SMA50 is 5.03%, and SMA200 is 10.07%. It is currently trading 5.73% lower than the 52-week high. Moreover, it just multiple topped. Conocco is an excellent company for the long run. Recent dividend history is as follows:

May 19, 2011


Feb 17, 2011


Oct 27, 2010


Jul 29, 2010


Marathon Oil Corp. (NYSE:MRO): MRO has been an excellent profit-maker for the last three years. As of the July 17 close, the company owns a market cap of $22.56 billion. P/E is 7.3, and forward P/E is 6.6. Analysts expect the company to have an 8.73% EPS growth for the next five years. Although profit margin is thin (3.98%), dividend yield is satisfactory (3.16%).

Although debts are unstable, assets are having healthy increases. Yields are okay. P/S is 0.3, while P/B is 0.9. PEG value is 0.83. Earnings increased by 116.59% this year, and 116.72% this quarter. Target price is $43.81, which implies a 38% increase potential. SMA200 is 17.50%. Although it had a serious downfall in the beginning of July, I believe the company will mend itself in the future. Debt-to-equity ratio of 0.3 is much better than the industry average of 0.6. To me it is obvious that Marathon will be an outperformer for the long term. Following are the recent dividend payments of Marathon per share:

Jul 1, 2011

Spin Off (0.5)

May 16, 2011


Feb 14, 2011


Nov 15, 2010


Southern Copper Corp. (NYSE:SCCO): Founded in 1952, SCCO mines, smelts and refines minerals in Chile, Peru, and Mexico. The copper company, as of the July 17 close, has a $31.84 billion market cap, an 18.55 P/E ratio, and a 10.20 forward P/E ratio. Analysts expect the company to have a 25.17% EPS growth in the next five years, which sounds utopic given the 2.90% EPS growth of the past 5 years. With a profit margin of 29.96%, and a dividend yield of 6.22%, SCCO is a superb stock for dividend lovers. Earnings increased by 67.35% this year. ROA is 23.47%, while ROE is 42.09%. Gross margin is 57.75%, and operating margin is 49.83%. SMA20 and SMA50 ratios are 10.68% and 7.50%, respectively. Target price is $41.04, indicating a 14% upside movement potential. Debt-to-assets ratio is slightly decreasing for the last four quarters. Moreover, the company is trading 26.49% lower than the 52-week high. I believe this company will beat the market in the future. Recent dividend payments of Southern Copper are:

May 2, 2011


Feb 11, 2011


Nov 12, 2010


Aug 10, 2010


Spectra Energy (NYSE:SE): SE will report its Q2 results August 3, before the market opens. The Texas-based Spectra, as of the July 17 close, has a market capitalization of $17.83 billion, and a trailing ratio of 16.93. Forward P/E is 14.83. Analysts expect the company to have an 8.94% EPS growth in the next five years. With an admirable profit margin of 22.38%, Spectra paid a 3.79% dividend last year.

Gross margin is 34.3%, while SMA200 is 7.36%. Insider transactions for the last 6 months have increased by 21.59%. Target price is $29.90, which implies a 9% increase potential. The company is trading 5.33% lower than its 52-week high. Spectra returned 31% in a year. Although debt-to-assets ratio is a little bit higher, the company is capable of overcoming that problem. Yields are consistent. Insiders have been exercising options for a while. Analysts give a 2.20 recommendation for Spectra Energy (1=Buy, 5=Sell). Recent dividend payments of SE per share are as follows:

May 11, 2011


Feb 9, 2011


Nov 9, 2010


Aug 11, 2010


Williams Partners (NYSE:WPZ): WPZ has been approved to expand its Transco pipeline to mid-Atlantic. As of the close July 17, WPZ has a market cap of $16.04 billion, a trailing P/E ratio of 14.0, and a forward P/E ratio of 15.16. Analysts estimate a 6.97% EPS growth for the next five years, which is quite conservative when its 35.26% EPS growth of the last five years is considered. With a profit margin of 18.71%, and a dividend yield of 5.19%, WPZ is a highly profitable stock for dividend lovers.

$1000 invested in WPZ in March, 2009, is about $5994 now. It returned 21.5% in a year. Debt-to-assets ratio is nearly stable for the last five quarters. Yields are fat and consistent. SMA50 is 5.89%, and SMA200 is 14.53%. Target price implies a 4% upside potential, while the company is trading 0.97% lower than its 52-week high. WPZ is a charming profit-maker in the long term. Here are the recent dividend payments of Williams Partners:

May 4, 2011


Feb 2, 2011


Nov 3, 2010


Aug 4, 2010


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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