After a dreadful late summer sell-off, West Texas Intermediate crude oil has roared past $80 a barrel and looks to be headed to $85, as OPEC has given every indication that it will be holding current production levels to protect that $75 and higher price point. While almost all the shut-in Gulf of Mexico production has returned to 100% since Hurricane Ida, Permian Basin producers have continued to watch their production levels, as free cash flow is now the name of the game over production growth.
We screened our 24/7 Wall St. database looking for the best dividend-paying energy stocks rated Buy at major Wall Street firms and found four that are cheap and have some serious upside potential. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This is one of the premier European integrated oil giants, and Goldman Sachs is very positive on the shares. BP PLC (NYSE: BP) engages in the energy business worldwide. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture, usage and storage.
The company is also involved in the convenience and mobility business, which manages the sale of fuels to wholesale and retail customers, convenience products, aviation fuels, and Castrol lubricants. It is involved in refining, supply and trading of oil products, as well as operation of electric vehicle charging facilities. In addition, it produces and refines oil and gas, and it invests in upstream, downstream and alternative energy companies, as well as in advanced mobility, bio and low carbon products, carbon management, digital transformation and power and storage areas.
Shareholders receive a whopping 4.25% yield. The Goldman Sachs price target for the domestic shares is $45, which compares with the $34.17 consensus target. The final BP stock trade for Friday was reported at $29.51.
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 it 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 that should support production levels in the coming years.
Chevron stock investors receive a hefty 4.75% dividend, which analysts feel comfortable will remain at current levels. BofA Securities has a $135 price target for the shares, which is well above the $123.64 consensus target. The final trade Friday was reported at $112.80 a share.