CNOOC Ltd (NYSE: CEO) is a major Chinese oil company that offers a dividend yield and a profit margin that is more than twice that the average for a member of the Standard & Poor’s 500 Index (NYSE: SPY).
While that is certainly appealing, making CNOOC Ltd very attractive now is that it is trading near its 52-week low.
Like so many others in the energy sector, CNOOC Ltd is suffering from the plunge in oil and natural gas prices. The stock price for CNOOC Ltd is down for the last quarter, six months, and year of market action. For 2015, CNOOC Ltd is also down (chart below). It is in times like these that major energy firms lie CNOOC Ltd become very attractive to long term investors looking for bargains.
When the share price falls for a stock, the dividend yield rises.
That has certainly happened with CNOOC Ltd. At present, the dividend yield is 4.29 percent. It is well over twice that for a member of the Standard & Poor’s 500 Index. The dividend yield for CNOOC Ltd is higher than that for Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM), too. Chevron and ExxonMobil are both Big Oil with solid dividend structures. The dividend component for CNOOC Ltd makes it very attractive for income investors.
The profit margin for CNOOC Ltd is also very high, which makes the dividend safe.
The profit margin for CNOOC Ltd is over 40 percent. That is much higher than the profit margin for Chevron or ExxonMobil. It is more than four times that for the average member of the Standard & Poor’s 500 Index.
CNOOC Ltd is positioned well to profit from growth in Asia, especially China..
It is based in Hong Kong. CNOOC Ltd is now trading around $135 a share. The 52-week high was $199.05. The mean analyst target price for the next year is $181.84. The superior dividend yield pays long term investors to wait for the share price to rebound.