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ConocoPhillips' Spin Off: A Success Story


ConocoPhillips and Phillips 66 are both well-known names in the oil & gas industry. While both companies have roots that trace back over a century, Phillips 66 is a newcomer on Wall Street, having spun off from its parent ConocoPhillips in 2012. In this piece, we take a look at how the two companies have fared since their split, comparing market capitalization, performance, and dividend histories.


The Spin Off


In 2012, ConocoPhillips (COP ) spun off its downstream assets and midstream assets to create the independent energy company Phillips 66 (PSX ). Prior to the spin off, ConocoPhillips was the fifth largest integrated oil company in the world, after it had merged with Phillips Petroleum in 2002.

On April 30, 2012, ConocoPhillip investors received one share of Phillips 66 for every two Conoco shares owned. Commenting on the spin-off, the new chairman and CEO of Phillips 66, Greg Garland, stated “Phillips 66 will be clearly differentiated from pure-play refining companies with specific plans for enhancing returns and growing shareholder distributions. We have an exciting future ahead of us.”


Market Cap



Currently, ConocoPhillips has a market capitalization of nearly $77 billion. Phillips 66′s market cap comes in at just over $32 billion, an impressive size considering the newly formed company’s relatively short trading history. On its first day of trading, PSX closed with a market cap of about $20.5 billion; and within two years the company more than doubled in size [see also The Ten Commandments of Dividend Investing].


Performance



Since its first day of trading on May 1, 2012, Phillips 66 has gained over 150%. The stock took a slight dip in the second quarter of 2013, but was able to pick up steam once again towards the end of that year. Since the spin-off, ConocoPhillips has also performed relatively well; though the older, more established company did not log in triple digit gains like PSX did. Overall, both companies seemed to have benefited from the split.


Dividend History



Phillips 66 paid its first quarterly dividend on September 4, 2012 in the amount of $0.20 per share. In the last quarter of 2012, the company raised its quarterly payouts to $0.25. Again in 2013, PSX raised its payout to an annualized $1.3275. Currently the stock’s annual payout is $2.00 per share.

ConocoPhillip’s has paid a dividend since 1993, though the company has not consecutively increased dividends. In 2012, COP did not raise dividends, but the following year the company raised its payout by 2.3%. Its largest annual dividend increase was in 2011; the company raised its annual dividend from $2.15 to $2.64.


The Bottom Line


Since the spin off, both ConocoPhillips and Phillips 66 have fared quite well. Both companies have logged in impressive returns since 2012; PSX and COP have also grown in terms of market cap size. While ConocoPhillips has been paying dividends for quite some time, Phillips 66′s relatively short track record is an impressive one – raising dividends every year since it began trading.

All data as of 1/15/2015

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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