Why 'Strong Buy' Big Dividend Energy Stocks Could Have a Massive Q4 Rally

Hess Midstream’s Gathering segment owns natural gas gathering and crude oil gathering systems, as well as produced water gathering and disposal facilities. Its gathering system consists of approximately 1,350 miles of high and low pressure natural gas and natural gas liquids gathering pipelines with capacity of approximately 450 million cubic feet per day, and the crude oil gathering system comprises approximately 550 miles of crude oil gathering pipelines.

The Processing and Storage segment comprises Tioga Gas Plant, a natural gas processing and fractionation plant located in Tioga, North Dakota; a 50% interest in the Little Missouri 4 gas processing plant located in south of the Missouri River in McKenzie County, North Dakota; and Mentor Storage Terminal, a propane storage cavern and rail, and truck loading and unloading facility located in Mentor, Minnesota.

The Terminaling and Export segment owns Ramberg terminal facility; Tioga rail terminal; and crude oil rail cars, as well as Johnson’s Corner Header System, a crude oil pipeline header system.

Shareholders receive an 8.51% distribution. Hess Midstream stock has a $38 price target at Goldman Sachs. The consensus target it $35.25, and Tuesday’s close was at $24.58.

Phillips 66

This extremely diversified energy company has a long and successful operating history, and it is a longtime 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 MLP, 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 MLP assets, such as its fast-growing chemical manufacturing business and its super-profitable refined products marketing business.

Phillips 66 is the top idea within refining coverage at Goldman Sachs, which continues to see headroom for incremental capital returns this year. The analysts are constructive on a positive rate of change at Refining in 2022. In addition, they continue to see attractive non-refining value in the other segments.

Here, the dividend yield is 5.11%. The Goldman Sachs price target of $109 is less than the $112.99 consensus target. Phillips 66 stock closed almost 3% higher on Tuesday at $76.22.

All these top dividend-paying energy sector giants have backed up nicely, and in a world where interest rates are still historically quite low, they offer dependable streams of passive income. Plus, with three integrated giants, two top energy master limited partnerships, an exploration and production favorite and a top refining leader, investors have plenty to choose from here to add or initiate energy positions.

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