Seemingly every day, we see the price of oil shoot higher. Brent crude closed Wednesday at $114.71 and West Texas Intermediate finished the day not far behind at $111.30. These are the highest prices for the black gold since 2011, and just this week alone prices are up a stunning 22%. While the policies of the Biden administration have had an effect, another key to the price increases is the potential for far less energy exports from Russia, as they remain in a serious conflict with Ukraine.

While the shale producers are starting to ramp up production, supply chain issues, the current runaway inflation (checking in at the highest level in 40 years) and a growing labor shortage have hindered the industry’s ability to increase output. The Organization of the Petroleum Exporting Countries (OPEC) is meeting this week, and it is uncertain whether they will raise production.
[in-text-ad]
The bottom line for investors is that, while the parabolic moves higher could come to an end at some point, it makes sense to own dividend-paying energy stocks. We screened our 24/7 Wall St. research database looking for high-yielding stocks that still have room to run after over a year of gains for the sector. The following six still make good sense, provide different angles to play the sector and are all rated Buy at major Wall Street firms.

It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Enbridge

This off-the-radar idea looks poised to break out to new highs soon. Enbridge Inc. (NYSE: ENB) is an energy infrastructure company that operates through the following five segments.

The Liquids Pipelines segment operates pipelines and related terminals to transport various grades of crude oil and other liquid hydrocarbons in Canada and the United States. The Gas Transmission and Midstream segment invests in natural gas pipelines and gathering and processing facilities in Canada and the United States.

The Gas Distribution and Storage segment is involved in natural gas utility operations serving residential, commercial and industrial customers in Ontario, as well as natural gas distribution and energy transportation activities in Quebec.

The Renewable Power Generation segment operates power generating assets, such as wind, solar, geothermal and waste heat recovery facilities, and transmission assets in North America and Europe. The Energy Services segment provides energy marketing services to refiners, producers and other customers, as well as physical commodity marketing and logistical services in Canada and the United States.

Enbridge stock investors receive a 6.11% dividend. Royal Bank of Canada has a price target equivalent to $47.27. The analysts’ consensus target is $45.19, and the last trade on Wednesday was reported at $44.40 a share.
[in-text-ad]

Enterprise Products Partners

This is the largest publicly traded energy partnership and a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) services include gathering, processing, transportation and storage of natural gas, natural gas liquid (NGL) fractionation, import and export terminaling, and offshore production platform services.

One reason many analysts may have a liking for the stock might be its distribution coverage ratio. This ratio is well above 1 times, making it relatively less risky among the master limited partnerships.

Investors receive a 7.45% distribution. The Goldman Sachs price target on Enterprise Products Partners stock is $30, and the consensus target is $28.77. Shares closed at $24.97 on Wednesday.

Exxon Mobil

Despite the recent rally in oil, this mega-cap energy leader still trades below levels printed five years ago and still offers investors an excellent entry point. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
Goldman Sachs said this after the strong fourth-quarter results were posted:

We expect the company to be a key beneficiary in this higher oil price environment, and we remain positive around the company’s sharp positive inflection in capital allocation strategy, Upstream portfolio, and leverage to a further demand recovery, with ExxonMobil offering greater Downstream/Chemicals exposure relative to peers.

[in-text-ad]
Shareholders receive a 4.37% dividend, which will continue to be defended. The $110 BofA Securities price target is well above the $81.55 consensus target. Exxon Mobil stock closed on Wednesday at $80.53.

Kinder Morgan

This top energy stock remains a favorite across Wall Street. Kinder Morgan Inc. (NYSE: KMI) operates as an energy infrastructure company in North America. The company operates through the following segments.

The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipelines and underground storage systems; natural gas gathering systems and natural gas processing and treating facilities; NGLs fractionation facilities and transportation systems; and liquefied natural gas (LNG) liquefaction and storage facilities.

The Products Pipelines segment owns and operates refined petroleum products and crude oil and condensate pipelines, as well as associated product terminals and petroleum pipeline transmix facilities.

The Terminals segment owns or operates liquids and bulk terminals that store and handle various commodities, including gasoline, diesel fuel, chemicals, ethanol, metals and petroleum coke. It also owns tankers.

The CO2 segment produces, transports and markets CO2 to recover and produce crude oil from mature oil fields, and it owns interests in or operates oil fields and gasoline processing plants, as well as operates a crude oil pipeline system in West Texas. It owns and operates approximately 83,000 miles of pipelines and 144 terminals.

Shareholders receive a 5.95% dividend. Mizuho has set a $21 price objective, while the consensus target for Kinder Morgan stock is $19.12. Wednesday’s closing print was $18.14.

This Wall Street favorite is a solid energy play for conservative investors looking for safer ideas. Valero Energy Corp. (NYSE: VLO) is one of the largest independent petroleum refining and marketing companies in the United States. It is based in San Antonio, Texas; owns 13 refineries in the United States, Canada and Europe; and has a total throughput capacity of around 2.5 million barrels per day.
[in-text-ad]
Valero also is a joint venture partner in Diamond Green Diesel, which operates a renewable diesel plant in Norco, Louisiana. Diamond Green Diesel is North America’s largest biomass-based diesel plant.

Valero sells its products in the wholesale rack or bulk markets in the United States, Canada, the United Kingdom, Ireland and Latin America. Approximately 7,400 outlets carry Valero’s brand names.

Investors receive a 4.69% dividend. The Valero Energy stock price target at Raymond James is $104. The consensus target is $94.95, and shares closed on Wednesday at $83.62.

Williams Companies

This is another top energy company and a solid pick for investors who are more conservative and looking for exposure to LNG. Williams Companies Inc. (NYSE: WMB) operates as an energy infrastructure company primarily in the United States.

Its Transmission & Gulf of Mexico segment comprises Transco and Northwest natural gas pipelines, as well as natural gas gathering and processing, and crude oil production handling and transportation assets in the Gulf Coast region. The Northeast G&P segment engages in the midstream gathering, processing and fractionation activities in the Marcellus Shale region, primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio.

The West segment comprises gas gathering, processing and treating operations in the Rocky Mountain region of Colorado and Wyoming, the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of South Texas, the Haynesville Shale region of northwest Louisiana and the Mid-Continent region, which includes the Anadarko, Arkom, and Permian basins. It also includes NGL and natural gas marketing operations, as well as storage facilities.

The company owns and operates 30,000 miles of pipelines, 34 processing facilities, nine fractionation facilities and approximately 23 million barrels of NGL storage capacity.

The dividend yield is 5.20%. A $36 price objective accompanies the Raymond James Strong Buy rating. The consensus is $33.14, and Williams Companies stock closed at $32.69 on Wednesday.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

These companies can profit from higher energy prices but offer investors who are more conservative a way to play the sector. With everything from the world’s largest integrated energy giant to the top energy master limited partnerships and one of the biggest refining companies, these are six ways to generate income and participate in the biggest rally in the energy and oil space since 2011. It is important to remember that MLP distributions can contain return of principal.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.