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ConocoPhillips may sport a 4.8 percent dividend yield, but it lacks growth. The Houston-based company is growing at a “snail’s pace” of 3 to 5 percent, Cramer said. It’s also not cheap, he added. When viewed from a debt-adjusted cash flow basis, it sells at a premium to rivals Chevron, Apache and Marathon. It’s also pricey on a P/E multiple basis, selling for 8.2 times forward earnings while Chevron sells for 7.6 times earnings and Apache and Marathon both trade at more than 6 times earnings.
All things considered, Cramer prefers Chevron. Even though it has a smaller dividend yield of 3.5 percent, it has more growth and that means more upside potential. For those interested in owning shares of an exploration and production company, though, Cramer suggests EOG Resources. He likes EOG because it has top-rate assets in North America and strong oil production prospects.
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