There was little surprise after Exxon Mobil posted stunning results for the latest quarter, including a massive $56 billion profit for 2022. While shareholders of the energy giant were thrilled, the White House scolded the company for what it deemed to be excessive profits at the expense of consumers who are paying high prices at the pump. That is despite the pump price plummeting since last summer, and just like that, the “windfall profits tax” threat was back on the table.

The reality for investors is that demand is growing and will continue to as China reopens and economies around the world improve. That, combined with policies of the current administration that are anti-fossil-fuel, likely means that the supply and demand imbalance may continue for some time.

With February typically a so-so month for stocks, and after a very solid January, it makes sense for investors maybe to take some profits and move to dividend-paying energy ideas. We screened our 24/7 Wall St. energy research database for companies with Buy-rated stocks that paid at least an 8% dividend. The following five top stocks came up, and all make sense for growth and income investors. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Antero Midstream

With shares trading near $11 apiece, this very well-run company offers a huge total return package. Antero Midstream Corp. (NYSE: AM) owns, operates and develops midstream energy infrastructure. It operates through two segments.

The Gathering and Processing segment includes a network of gathering pipelines and compressor stations that collects and processes production from Antero Resources’ wells in West Virginia and Ohio.

The Water Handling segment delivers fresh water and offers other fluid handling services, such as wastewater transportation, disposal and treatment, as well as high-rate transfer services.

Investors receive an 8.26% distribution. Wells Fargo has a $13 target price on Antero Midstream stock. The consensus target is $11.29, and shares closed on Wednesday at $10.74.

Coterra Energy

This company was formed by the closing of the $17 billion merger of Cabot Oil & Gas and Cimarex Energy in 2021. Coterra Energy Inc. (NASDAQ: CTRA) is an independent oil and gas company engaged in the development, exploration and production of oil, natural gas and natural gas liquids (NGLs) in the United States. It primarily focuses on the Marcellus Shale, with approximately 177,000 net acres in the dry gas window of the play located in Susquehanna County, Pennsylvania.
Coterra also holds Permian Basin properties with approximately 306,000 net acres and Anadarko Basin properties located in Oklahoma with approximately 182,000 net acres. In addition, it operates natural gas and saltwater disposal gathering systems in Texas. The company sells its natural gas to industrial customers, local distribution companies, oil and gas marketers, major energy companies, pipeline companies and power-generation facilities.

As of December 31, 2021, it had proved reserves of approximately 2,892,582 thousand barrels of oil equivalent, which include 189,429 thousand barrels of oil and other liquid hydrocarbons, 14,895 billion cubic feet of natural gas and 220,615 thousand barrels of NGLs.

Shareholders receive a 9.95% dividend. Mizuho’s $41 target price is well above the $31.25 consensus target. Coterra Energy stock closed on Wednesday at $24.54.

Energy Transfer

The top master limited partnership is a very safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.

The company is a publicly traded limited partnership with core operations that include complimentary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, NGL and refined product transportation and terminalling assets; NGL fractionation; and various acquisition and marketing assets.

After the purchase of Enable Partners in 2021, Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in all the major U.S. producing regions and markets across 41 states, further solidifying its leadership position in the midstream sector. The completion of the transaction was immediately accretive to Energy Transfer and furthers Energy Transfer’s deleveraging efforts. It also adds significant fee-based cash flows from fixed-fee contracts. Additionally, the combined operations of the two companies is expected to generate annual run-rate cost and efficiency synergies of more than $100 million, excluding potential financial and commercial synergies.

Through its ownership of Energy Transfer Operating (formerly known as Energy Transfer Partners), the company also owns Lake Charles LNG, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco and the general partner interests, and 39.7 million common units of USA Compression Partners.

Energy Transfer stock comes with a 9.19% distribution. The price target at Morgan Stanley is $18, while the consensus target is $16.50. The shares closed at $13.07 on Wednesday.

New Fortress Energy

While it is somewhat off the radar, top Wall Street analysts are very bullish on this company over the next few years. New Fortress Energy Inc. (NASDAQ: NFE) operates as an integrated gas-to-power infrastructure company that provides energy and development services to end-users worldwide.
New Fortress operates in two segments. The Terminals and Infrastructure segment engages in the natural gas procurement and liquefaction, as well as shipping, logistics, facilities and conversion or development of natural gas-fired power generation. The Ships segment offers floating storage and regasification units, and liquefied natural gas (LNG) carriers, which are leased to customers under long-term or spot arrangements.

New Fortress Energy operates LNG storage and regasification facility at the Port of Montego Bay, Jamaica; marine LNG storage and regasification facility in Old Harbour, Jamaica; landed micro-fuel handling facility in San Juan, Puerto Rico; marine LNG storage and regasification facility in Sergipe, Brazil; and LNG receiving facility in La Paz, Mexico, as well as Miami facility.

The dividend yield here is 8.91%. BofA Securities recently upgraded the stock and has a $67 target price. New Fortress Energy stock has a consensus target of $66.70, but the stock closed on Wednesday at $40.48.

Pioneer Natural Resources

Many Wall Street analysts love this stock as a pure crude oil play, and the company employs a variable dividend strategy. Pioneer Natural Resources Co. (NYSE: PXD) operates as an independent oil and gas exploration and production company in the United States.

The company explores for, develops and produces oil, NGLs and natural gas. It has operations in the Midland Basin in West Texas. As of December 31, 2021, the company had proved undeveloped reserves and proved developed non-producing reserves of 130 million barrels of oil, 92 million barrels of NGLs and 462 billion cubic feet of gas, and it owned interests in 11 gas processing plants.

Pioneer production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.

Pioneer is a huge player in the Permian basin and the Eagle Ford in Texas, and the company owns more than 20,000 locations in the world’s second-largest oil reservoir in the Midland Basin. With a stellar balance sheet, the company is poised to remain a top player in the Permian, as it expects to deliver solid production growth going forward.

Pioneer Natural Resources stock investors receive a 10.85% dividend, which, again, could be lower this year and may vary from quarter to quarter. The Strong Buy rating at Raymond James is accompanied by a $300 target price. The consensus target is $273.93, and Wednesday’s close was at $223.96.

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These five stocks offer different ways to play the energy sector. The advantage for investors is that solid distributions and dividends provide a backstop for the stocks and that could be a big plus if the market rolls over again, which now seems quite likely.

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