ConocoPhillips (COP +2.37%) has built one of the best oil and gas portfolios in the industry. It has one of the highest-quality resource positions in the lower-48 states and a global portfolio of top-tier expansion projects.
The company's best-in-class asset base positions it to generate significantly more cash flow by 2029. That should continue fueling top-tier dividend growth. These features make ConocoPhillips a top oil stock to buy and hold through the end of the decade.
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A cash flow machine
ConocoPhillips recently reported its fourth-quarter and full-year results for 2025. It was another strong year for the oil giant. CEO Ryan Lance ran through the highlight reel in the fourth-quarter earnings press release. He stated, "We outperformed our initial production, capital, and cost guidance; successfully integrated Marathon Oil, doubling our synergy capture; and made strong progress on our incremental cost reduction and margin enhancement efforts."
Overall, the company produced an average of nearly 2.4 million barrels of oil equivalent last year, a 2.5% increase from 2024. It also completed its integration of Marathon Oil, capturing more than $1 billion of annual cost savings, double its initial estimate. The company now expects to deliver another $1 billion of cost reductions and margin enhancements by the end of this year.
NYSE: COP
Key Data Points
Those cost savings helped the company produce strong cash flow amid lower oil prices. It generated $19.9 billion of cash from operating activities and $7.3 billion in free cash flow. The oil giant also sold $3.2 billion of non-core assets. That allowed the company to return $9 billion to shareholders through repurchases ($5 billion) and dividends ($4 billion). The leading oil dividend stock raised its payment by 8% late last year, achieving its target of delivering dividend growth in the top 25% of S&P 500 companies.
High-octane free cash flow growth ahead
ConocoPhillips spent $12.6 billion on capital expenditures and other investments to maintain and expand its global oil and gas operations. That included spending related to three major liquefied natural gas (LNG) export projects and its Willow oil project in Alaska.
The company expects those investments will fuel an additional $1 billion in incremental free cash flow annually through 2028 as its LNG projects come online and it benefits from additional cost synergies. Additionally, the company expects its free cash flow to surge by another $4 billion when Willow comes online in 2029. That's $7 billion in free cash flow growth by the end of the decade, nearly doubling last year's total. This outlook assumes crude oil averages $70 a barrel; it can produce $6 billion at $60 a barrel (oil was recently around $65 a barrel and averaged roughly $69 last year). This growing free cash flow will give the company more money to return to shareholders through share repurchases and dividend increases.
Robust growth through 2029
ConocoPhillips has significant visibility into its ability to generate more cash in the coming years. It's on track to nearly double its annual free cash flow by 2029, giving it more money to return to shareholders, including continued high-octane dividend growth. That combination of growth and income makes ConocoPhillips a top oil stock to buy and hold through the end of the decade.
