Royal Dutch Shell
This company has survived the plunge in oil pricing plunge 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 natural gas liquids.
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, liquefied natural gas 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 company’s $50 billion acquisition of BG Group finally closed in February, and a reported 2,800 jobs will be cut. This continues the reorganization efforts that began last year with 7,500 job cuts.
Royal Dutch Shell investors are paid a 5.75% dividend. No consensus price target was listed. Shares closed Friday at $55.56.
This company is another giant European energy giant, this one based in France. Total S.A. (NYSE: TOT) is a global integrated energy producer and provider, a leading international oil and gas company, and the world’s second-ranked solar energy operator with SunPower.
The company operates through three segments. The Upstream segment explores and produces oil and gas; ships, trades and markets natural gas, liquefied natural gas and liquefied petroleum gas (LPG); generates power; and mines and markets coal.
The Refining & Chemicals segment refines and produces petrochemicals and provides sealing, insulation, fluid transfer and transmission and transportation solutions, as well as offers chemical processes and services for electronics, surface finishing and semiconductor manufacturing. It is also involved in trading and shipping crude oil and petroleum products.
The Marketing & Services segment supplies and markets petroleum products, including automotive fuels, biofuels, home heating oil and heavy fuel oil, lubricants, LPG, asphalt, aviation fuel, additives and special fuels and special fluids through service stations for light vehicles and trucks.
The main drivers behind the company’s ability to stay profitable include an increase in oil and gas manufacturing and strong growth in the company’s very profitable refining division. Total is plenty big enough, as it has a $114 billion market cap and has $9.72 in cash flow per share, which is almost seven times the market mean.
Total investors receive a 4.73% dividend. The consensus target of $53.36 compares to Friday’s close at $48.74.
These are the kind of large cap market leaders that make good sense in long-term growth and income portfolios. While the Brexit surprise could generate additional volatility down the road, the track record of these top companies makes them solid additions.