After a horrific year, investors soon will be receiving the dreaded fourth-quarter and year-end statements, and they will not be pretty. The Nasdaq ended the year down a stunning 33%, while the S&P 500 was battered to the tune of 19.4%, putting one of the indexes firmly in bear market territory and the other knocking on the 20% down door. The venerable Dow Jones Industrials finished the best of the worst, down right at the 10% mark.
So what is the plan for 2023? BofA Securities Equity and Quant strategy guru Savita Subramanian, along with her team, feel that last year’s big winner, the energy sector, could once again shine in 2023. She is also quite positive on stocks that generate dependable dividend income, as total return could play a large part of a winning portfolio this year.
The extensive BofA Securities year-end research notes that energy is aided by the kind of inflationary environment in which we remain. While peak inflation likely has been hit, we are still in an environment with prices rising 7% year over year. Plus, energy stocks have come down in price since oil hit $120 per barrel last June.
We screened the BofA Securities energy research database, looking for Buy-rated companies that offer big and dependable dividends that could be raised in 2023, and found the following six top picks. It is important to remember, though, that no single analyst report should be used as a sole basis for any buying or selling decision.
This company was long considered an industry leader when it was known as Apache, and the stock is perhaps offering one of the best entry points in the sector. APA Corp. (NYSE: APA) explores for and produces oil and gas properties. It has operations in the United States, Egypt and the United Kingdom, as well as has exploration activities offshore Suriname. It also operates gathering, processing and transmission assets in West Texas, as well as holds ownership in four Permian-to-Gulf Coast pipelines.
The company is one of the largest U.S. exploration and production companies, with 2.3 billion barrels of oil equivalent of proven reserves (63% liquids). It is an explorer, acquirer and exploiter, and a fiscally conservative company that has grown its reserves and production consistently via acquisitions and organic projects.
APA reported third-quarter net income of $422 million, after reporting a loss in the same period a year earlier. The company said it had profit of $1.28 per share, and adjusted earnings topped Wall Street expectations.
Shareholders receive a 2.14% dividend. BofA Securities has a $65 price target for APA stock, and the consensus target is just $55.73. The last trade for Friday came in at $46.68 a share.
This integrated giant remains a safer way for investors looking to get positioned in the energy sector. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide.
The Upstream segment is involved in the exploration, development, production and transportation of crude oil and natural gas; processing, liquefaction, transportation and regasification associated with LNG; transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as operating a gas-to-liquids plant.
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