Energy Business

Oil Prices Spike on Hurricane Damage: Buy These 4 Safe, Big Dividend Leaders Now

Sixteen years to the day that Hurricane Katrina left almost all of New Orleans and much of the surrounding area underwater, Hurricane Ida has slammed into southeast Louisiana as a monster Category 4 storm. While not the unmitigated disaster that Katrina was, the rebuild will once again take time, and many services could take days or even weeks to be put back online.

One area that is always affected when a huge storm comes in is oil and gas production in the Gulf of Mexico. Rigs are shut down and crews are evacuated. West Texas Intermediate crude prices are spiking back to $70 per barrel, and growth and income investors looking to seize the moment may want to consider buying any or all of the mega-cap integrated supermajors, which all pay big and dependable dividends.

We screened our 24/7 Wall St. database looking for the integrated giants rated Buy at major Wall Street firms, and we updated pricing and dividend payouts. While all four of the stocks here are rated Buy, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Chevron

This energy giant is a solid way for investors who are more conservative to be positioned in the 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.

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.

Chevron posted quarterly earnings of $1.71 per share, beating the consensus estimate of $1.54 per share. This compares to a loss of $1.59 per share a year ago. These figures are adjusted for non-recurring items. The report represents an earnings surprise of about 11%.

Shareholders receive a hefty 5.43% dividend, which the analysts feel comfortable will remain at current levels. The BofA Securities price target for the shares is $125. The consensus target price is lower at $122.86. The last Chevron stock trade on Friday was reported at $98.64 a share.