Goldman Sachs Says Oil Going Much Higher: 5 'Strong Buy' Dividend Stocks to Buy Now


This is the top holding for the Alerian MLP energy exchange-traded fund. MPLX L.P. (NYSE: MPLX) is primarily engaged in crude oil and refined products transportation and terminaling in the U.S. Midwest and Gulf Coast regions, as well as natural gas gathering and processing in the northeast from its prior acquisition of MarkWest Energy in 2015. MPLX was formed by independent U.S. refiner Marathon Petroleum.

The company’s assets include a network of crude oil and refined product pipelines; an inland marine business; light-product terminals; storage caverns; refinery tanks, docks, loading racks and associated piping; and crude and light-product marine terminals. It also owns crude oil and natural gas gathering systems and pipelines, as well as natural gas and NGL processing and fractionation facilities in key U.S. supply basins.

Investors receive an 8.34% distribution. Goldman Sachs has set a $37 price target on MPLX stock. The $35 consensus target is closer to Wednesday’s closing price of $33.80 a share.

Phillips 66

This extremely diversified energy company has a long and successful operating history and is another Goldman Sachs Conviction List member. Phillips 66 (NYSE: PSX) operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties. The company holds many of these assets within its master limited partnership, Phillips 66 Partners.

The company benefits from the tax-advantaged structure while still operating a more diversified operating business that also contains many assets that are not ideal master limited partnership assets, such as its fast-growing chemical manufacturing business and its super-profitable refined products marketing business.

After it posted stellar results for the quarter, the analysts had this to say:

Phillips 66 remains our top idea within our Refining coverage, where we continue to see headroom for incremental capital returns this year, are constructive on a positive rate of change at Refining in 2022, and continue to see attractive non-refining value in Midstream, Marketing, and Chemicals.

Investors receive a 4.20% dividend. The Goldman Sachs price target is $95. The consensus target is $95.57, and Phillips 66 stock closed at $87.70 on Thursday.

These are two leading mega-cap integrated energy companies (one based here and one in Europe), two of the best performing energy master limited partnerships and the top Goldman Sachs refining idea. All five pay big and dependable dividends or distributions, and they look ready to continue to ride the increase in oil pricing this year, and perhaps beyond. Investors should remember that MLP distributions may contain return of principal.

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