Tensions in the Middle East have been present since Israel became a nation-state in 1948. So, the recent Hamas attack on Israel may be the flashpoint for a much larger war. From the Arab-Israeli War in 1948 to the Six-Day War in 1967 and the Lebanon War in 1982, the probability for conflict in the region is always present.
This time may be different. And it could shape the future of the Middle East for decades to come. The savage and barbaric actions by Hamas against Israeli citizens could spark a backlash like we have never seen.
So who would benefit if the Hamas-Israel war escalates? Likely the big integrated oil companies in the United States and Europe. Six top Buy-rated stocks that have significant dividends look to be benefactors in the event of a wider conflict.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
BP
BP PLC (NYSE: BP) is a premier European integrated oil giant engaged in the energy business worldwide. It produces and trades in natural gas; offers biofuels; and operates onshore and offshore wind power and solar power generating facilities. It also provides de-carbonization solutions and services, such as hydrogen and carbon capture, usage and storage.
The company is also involved in the convenience and mobility business. That is, it manages the sale of fuels to wholesale and retail customers, as well as convenience products, aviation fuels and Castrol lubricants. It engages in refining, supply and trading of oil products, as well as the operation of electric vehicle charging facilities. In addition, it produces and refines oil and gas, and it invests in upstream, downstream and alternative energy companies. In addition, BP invests in advanced mobility, bio and low-carbon products, carbon management, digital transformation and power and storage areas.
Shareholders receive a 4.05% yield with the coming increase. Raymond James has a $48 target price. That compares with the $43.88 consensus target and the closing share price on Thursday of $39.29.
Chevron
This energy giant is a solid play for investors who are more conservative and looking to be positioned in the sector. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company. It has worldwide operations in exploration and production, refining and marketing, transportation, and petrochemicals. The company sports a sizable dividend and has a solid place in natural gas and liquefied natural gas (LNG).
With the strongest financial base of the majors, coupled with an attractive relative asset base, many on Wall Street feel that Chevron offers the most straightforwardly positive risk/reward. Although current conditions do not warrant a large focus on production growth, Chevron possesses numerous medium-term drivers that should support production levels in the coming years.
Chevron stock comes with a 3.75% dividend. UBS recently started coverage. Its $210 target price is well above the consensus target of $188.32 and Thursday’s close at $161.23.
ConocoPhillips
This is another large-cap company that offers strong value for investors. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, natural gas liquids (NGLs) and LNG worldwide.
The company portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects.
Many Wall Street analysts feel Conoco can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford with visibility on future growth from a sizable position in the Permian Basin.
Investors receive a 2.00% dividend. BofA Securities has set its price target at $150. ConocoPhillips stock has a consensus target of $135.92, and shares closed at $121.11 on Thursday.
Exxon Mobil
This mega-cap energy leader trades at a reasonable valuation 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. (These 19 companies were caught manipulating the free market.)
Top Wall Street analysts expect Exxon to remain a key beneficiary in this higher oil price environment, and most remain strongly positive about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to a further demand recovery, with Exxon Mobil offering greater downstream/chemicals exposure relative to peers.
In a staggering deal that has been rumored since last spring, Exxon Mobil announced this week the purchase of oil shale giant Pioneer Natural Resources for $59.5 billion in an all-stock purchase. The deal will create the largest U.S. oil field producer and will guarantee a decade of low-cost production.
The dividend yield here is 3.45%. The $150 BofA Securities price target is higher than the consensus target of $125.73. Exxon Mobil stock closed on Thursday at $106.47.
Occidental Petroleum
Over the past two years, Berkshire Hathaway has been scooping up shares of this top energy leader. Occidental Petroleum Corp. (NYSE: OXY) engages in the acquisition, exploration and development of oil and gas properties in the United States, the Middle East, Africa and Latin America.
The company’s Oil and Gas segment explores for, develops, and produces oil and condensate, NGLs and natural gas. The Midstream and Marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide and power. This segment also trades around its assets, consisting of transportation and storage capacity, and it invests in entities.
The Chemical segment manufactures and markets basic chemicals, including chlorine, caustic soda, chlorinated organics, potassium chemicals, ethylene dichloride, chlorinated isocyanurates, sodium silicates and calcium chloride, as well as vinyls, comprising vinyl chloride monomer, polyvinyl chloride and ethylene.
Shareholders receive a 1.13% dividend. Occidental Petroleum stock has an $80 price target at Truist Financial. The $70.71 consensus target is closer to Thursday’s closing print of $63.22.
TotalEnergies
This French integrated giant is another great way to play an energy rally from the European side. TotalEnergies S.E. (NYSE: TTE) operates as an integrated oil and gas company worldwide. Its Exploration & Production segment engages in oil and natural gas exploration and production activities in approximately 50 countries.
The Integrated Gas, Renewables & Power segment engages in the LNG production, shipping, trading and regasification activities; trading of liquefied petroleum gas (LPG), petcoke and sulfur, natural gas and electricity; transportation of natural gas; electricity production from natural gas, wind, solar, hydroelectric and biogas sources; energy storage activities; and development and operation of biomethane production units, as well as provides energy efficiency services.
The Refining & Chemicals segment refines petrochemicals, including olefins and aromatics; and polymer derivatives, such as polyethylene, polypropylene, polystyrene and hydrocarbon resins, as well as biomass conversion and elastomer processing. This segment also engages in trading and shipping crude oil and petroleum products.
The Marketing & Services segment produces and sells lubricants; supplies and markets petroleum products, including bulk fuel, aviation and marine fuel, special fluids, compressed natural gas, LPG and bitumen; and provides fuel payment solutions. It operates approximately 15,500 service stations.
Investors receive a 4.73% dividend. The BofA Securities price target is $83. The consensus target is $73.63. On Thursday, TotalEnergies stock closed at $65.46.
24/7 Wall St.In an odd anomaly, oil has actually backed up in price since the beginning of hostilities, after a big run since the summer. This is providing investors who have been looking for a better entry point just the chance they have been waiting for. Regardless of the final outcome, these six dividend-paying legacy blue chips remain solid investments for growth and income investors.
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