This top company has one of the highest yielding domestic stocks in the energy sector. Occidental Petroleum Corp. (NYSE: OXY) is an oil-levered multinational organization with principal business segments in oil and gas and in chemicals. The oil and gas segment explores for, develops, produces and markets crude oil and natural gas, primarily in the U.S. Permian Basin, Colombia, Bolivia, Libya, Oman, Qatar and Yemen. The chemicals segment manufactures and markets basic chemicals, vinyls and performance chemicals.
With a rock-solid balance sheet and a commitment to dividend coverage, investors look safe for now. Occidental has paid quarterly cash dividends continuously since 1975, and it has increased its dividend each year since 2002. The company reported solid earnings and recently raised the dividend. The analysts said this in a recent report:
Occidentals recent dividend increase is a small but significant signal of management’s commitment to its dividend growth strategy. The dividend is covered by cash flow bricks. Permian growth currently funded by asset sales, looks self-funding by end 2018. At $50 oil, the company grows at 5% and fully covers a current 5% yield – the highest of the US oils, with room for growth post 2018.
The company recently reported strong second-quarter results and may be among the best plays for growth and income investors.
Shareholders receive a 5.23% dividend. The $70 Merrill Lynch price target compares with a consensus target of $65.13. The stock closed on Monday at $58.84.
Royal Dutch Shell
This company has survived the plunge in oil pricing as good as or better than any other major integrated stock. Royal Dutch Shell PLC (NYSE: RDS-A) operates as an independent oil and gas company worldwide through its Upstream and Downstream segments. The company explores for and extracts crude oil, natural gas and NGLs.
Royal Dutch Shell also converts natural gas to liquids to provide fuels and other products; markets and trades crude oil and natural gas; transports oil; liquefies and transports gas; extracts bitumen from mined oil sands and converts it to synthetic crude oil; and generates electricity from wind energy.
The company generated 3.83 billion cubic feet per day of natural gas in the second quarter of this year from its integrated gas operations and another 6.40 billion cubic feet per day from its upstream operations. The company posted solid results and the analysts noted this:
Shell has organically covered the total cost of its dividend at $50 barrel over the last month – underlying Free-cash-flow accretion from the BG Group plc takeover last year. With gearing down from 29% to 25% in the first half of 2017 already, the company remains on track to see gearing drop below 20% next year.
Investors receive a 5.88% dividend. Merrill Lynch has set its price objective at $62, near the posted consensus target of $62.85. The stock closed Monday at $54.32.
These four top companies are solid total return plays for long-term growth and income investors, and they make among the best sense for investors looking to stay in the equity markets but worried about a potential market correction in the fall.