This is 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.
Occidental shareholders are paid a sizable 4.46% dividend. The $103 Merrill Lynch price target compares with a $94.18 consensus target and the most recent close at $69.95 a share.
Royal Dutch Shell
This is a top international play for investors looking to add energy exposure. 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.
In addition, the company engages in the conversion of crude oil into a range of refined products, including gasoline, diesel, heating oil, aviation fuel, marine fuel, LNG for transport, lubricants, bitumen and sulphur; production and sale of petrochemicals for industrial customers; refining; trading and supply; pipelines and marketing; and alternative energy businesses.
The Merrill Lynch team remains bullish on the stock and noted this when earnings were released:
The company delivered $4.2 billion excess free cash flow in the third quarter and announced buyback acceleration in the fourth quarter. This signals managements confidence in free cash flow momentum despite a slight third quarter net income miss. We believe Royal Dutch Shell will deliver sector-leading 2020 free cash flow yield above 16%.
Investors are paid a huge 5.04% dividend. Merrill Lynch has set its price objective at $85. The consensus figure was last seen at $83.67, and the stock closed at $63.39 a share on Monday.
With oil prices hovering near 2018 lows, these stocks are outstanding long-term buys for growth portfolios looking for income as well. With the sanctions on Iran fully in place, demand could soar, which could lift benchmark prices as we close out the year.