The energy sector is still a major part of the global economy, and 2024 has been an eventful year for oil and gas companies. With Brent crude prices staying between $74 and $90 per barrel, the industry has shown its strength through careful spending, efficient operations, and solid returns to investors. 

By November 2024, oil and gas companies globally had paid out $213 billion in dividends and bought back $136 billion worth of shares, highlighting their focus on rewarding shareholders.

ConocoPhillips (COP), one of the top exploration and production companies, has stood out this year. In the third quarter of 2024, it hit record production levels in its Lower 48 operations – its largest business segment -- contributing to a total output of 1.917 million barrels of oil equivalent per day (MBOED). 

Even with lower realized prices, the company raised its quarterly dividend by 34% to $0.78 per share and added $20 billion to its share buyback plan. These decisions reflect its goal to return at least $9 billion to shareholders this year.

JPMorgan recently upgraded ConocoPhillips to "Overweight," predicting it will be one of the few E&P companies able to increase cash distributions in 2025, thanks to its $6 billion share buyback program and strong performance. 

As global demand rises from LNG exports and electrification trends, ConocoPhillips is well-placed to take advantage of these opportunities. Let’s take a closer look at why analysts like JPMorgan see it as a top energy dividend stock right now.

The Numbers Behind ConocoPhillips’ Success

ConocoPhillips (COP) is one of the biggest oil and gas producers in the world, focusing on extracting oil and natural gas from a mix of low-cost, high-quality assets. Its operations cover key areas like the Permian Basin, Eagle Ford, and Bakken in the U.S., along with significant international projects. This focus on efficiency and scale has helped ConocoPhillips maintain its position as a leader in the energy industry.

That said, 2024 has been a rough year for its stock. Year-to-date, it’s down 11.2%, with volatility continuing into November when the stock fell 9.16%, reaching $115.38 before sliding to its current price of $102.95. Shares have found some stability around the $101.29 support level, suggesting COP might be finding its footing.

Financially, ConocoPhillips posted solid Q3 results with $2.1 billion in earnings or $1.76 per share — lower than last year’s $2.8 billion due to weaker commodity prices. Adjusted earnings were $1.78 per share, backed by strong cash flows of $5.8 billion and record production levels of 1,917 MBOED. Its Lower 48 operations hit an all-time high of 1,147 MBOED, highlighting its operational strength.

On valuation, ConocoPhillips trades at a forward P/E ratio of 13.1x, slightly higher than the sector average of 12.9x, but justified by its strong earnings and growth potential. Its price to earnings growth (PEG) ratio of 1.9x makes it an attractive pick for investors looking for value and growth, aligning with JPMorgan’s view that this is one energy dividend stock worth buying now.

Key Growth Catalysts Powering ConocoPhillips

ConocoPhillips recently wrapped up its acquisition of Marathon Oil, a significant move bringing more high-quality, low-cost assets to its already strong portfolio. This deal will generate over $1 billion in synergies within the next year, boosting efficiency and cash flow. 

On top of that, the company spent $300 million to increase its stake in Alaska’s Kuparuk River and Prudhoe Bay units, reinforcing its position in a region known for reliable production. These strategic moves not only grow ConocoPhillips’ resource base but also strengthen its ability to deliver solid returns to shareholders over the long term.

What really stands out about ConocoPhillips is how much it prioritizes rewarding its investors. In Q3 2024 alone, the company returned $2.1 billion to shareholders through dividends and stock buybacks, thanks to its strong cash flow. 

What Analysts See Ahead for ConocoPhillips

Analysts see plenty of potential for ConocoPhillips, thanks to its strong financial outlook and smart positioning. The company expects Q4 2024 production to land between 1.99 million and 2.03 million barrels of oil equivalent per day (MMBOED), with full-year production projected at around 1.94 to 1.95 MMBOED. This steady growth reflects the impact of recent acquisitions and investments, which are set to boost production and cash flow in the years ahead.

Analysts are largely optimistic about ConocoPhillips, giving it a consensus "Strong Buy" rating. Out of 25 analysts, 20 rated it a “Strong Buy," one a “Moderate Buy,” and four a “Hold.” The average price target is $134.92, which suggests potential upside of 30%. 

JPMorgan recently upgraded the stock to "Overweight" from "Neutral," raising its price target to $123 from $120. The firm believes ConocoPhillips is well-positioned to be one of the few E&P companies able to increase cash distributions in 2025 significantly.

Institutional investors also seem confident in the stock’s future. Around 82.36% of ConocoPhillips’ shares are held by institutions, with major players like Vanguard Group, BlackRock, and State Street leading the way. JPMorgan Chase even increased its holdings by 6.5% last quarter, further highlighting institutional faith in the company’s potential.

The Bottom Line on COP Stock 

ConocoPhillips stands out as a compelling energy dividend stock backed by strategic acquisitions, robust cash flow, and a clear commitment to shareholder returns. With analysts overwhelmingly bullish and JPMorgan projecting increased cash distributions in 2025, COP offers a rare combination of growth potential and reliable income. For investors seeking stability in a volatile sector, ConocoPhillips is well-positioned to deliver.