There has been a tsunami of Wall Street chatter recently about interest rates going higher. Many feel that the Federal Reserve could start raising interest rates by the end of 2022, or even sooner. In addition, many strategists think that the tapering of the quantitative easing program, where the Federal Reserve buys government bonds across the curve and mortgage debt, will be starting as early as this summer.
The bottom line for yield-starved investors is that interest rates, while surely higher than a year ago, are still at levels that remain close to generational lows, and despite a move higher, the benchmark 10-year U.S. Treasury still yields a puny 1.61%. In 2007 the bond had a 5.05% yield.
We screened our 24/7 Wall St. research database looking for companies in the red-hot energy sector that pay big dividends, and we found five that not only deliver dependable high yields but have the potential to go higher as oil nears the $70 level, which is the highest since 2018. It is still important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This energy giant is a solid way for more conservative investors looking to be positioned in the energy sector. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company, with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals. The company sports a sizable dividend and has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG).
With the strongest financial base of the majors, coupled with an attractive relative asset base, many on Wall Street feel that Chevron offers the most straightforwardly positive risk/reward. Although current conditions do not warrant a large focus on production growth, Chevron possesses numerous medium-term drivers (Noble integration, Permian, TCO/WPMP expansion, Gulf of Mexico exploration, Vaca Muerta, and so on) that should support production levels in the coming years.
Shareholders receive a hefty 5.03% dividend, which the analysts feel will remain at current levels. The BofA Securities price target for the Buy-rated shares is $125. That compares to a Wall Street consensus target of $120.20. The last Chevron stock trade for Tuesday was reported at $106.65 per share.