Investing

Oil Hits $80 and 5 Ultra-Yield Energy Stocks Are Top March Buys

Lee Jackson

Published: March 6, 2024 12:17 pm

While most investors have been fixated on the parabolic rise of the Nasdaq, the S&P 500, and Bitcoin, hardly any big money has been watching energy. That likely will end as West Texas Intermediate (WTI) hits the $80 mark intraday for the first time in 2024, and OPEC+ announced they will be extending the current production cuts until at least the middle of the year.

With the war in the Middle East expanding, demand and consumption worries have been the only things keeping the benchmark price for oil below the $80 level. With Spring officially here in less than two weeks, demand should pick up for Spring Break, and then, before you know it, the summer driving season will be upon us.

We screened our 24/7 Wall Street energy stock research database and found 5 top companies that are all ‘Strong Buy’ rated by top Wall Street analysts and pay big, dependable, ultra-yield dividends.

Civitas Resources

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Trading at a cheap 5.85 times estimated 2024 earnings with a 8.19% dividend, this could be a total return gem for 2024. Civitas Resources Inc. (NYSE: CIVI) is an exploration and production company focused on the acquisition, development, and production of oil and natural gas in the Rocky Mountain region, primarily in the Wattenberg Field of the Denver-Julesburg Basin of Colorado.

Last October, Civitas signed an agreement with Vencer Energy to acquire oil-producing assets in the Midland Basin of West Texas for a total consideration of approximately $2.1 billion, subject to customary terms, conditions, and closing price adjustments. The Acquisition is expected to close this month.

Energy Transfer

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The top master limited partnership is a safe way for investors looking for energy exposure and income, as the company pays a massive 9.40% distribution. Energy Transfer LP (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 of the major domestic production basins.

The company is a publicly traded limited partnership with core operations that include:

• Complementary natural gas midstream
• Intrastate and interstate transportation and storage assets
• Crude oil, natural gas liquids (NGL), and refined product transportation and terminalling assets
• NGL fractionation and various acquisition and marketing assets

Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in all significant U.S.-producing regions and markets across 41 states, further solidifying its leadership position in the midstream sector.

Through its ownership of Energy Transfer Operating, L.P., the company also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights, and 28.5 million standard units of Sunoco LP (NYSE: SUN), and the public partner interests and 39.7 million standard units of USA Compression Partners, LP (NYSE: USAC).

MPLX

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This company is one of the top holdings in the Alerian MLP energy exchange-traded fund, paying shareholders a strong 9.15% dividend. MPLX LP. (NYSE: MPLX) is primarily engaged in transporting crude oil and refined products and terminating in the US Midwest and Gulf Coast regions and natural gas gathering and processing in the northeast. Independent US refiner Marathon Petroleum Corp (NYSE: MPC) formed MPLX.

The company’s assets include:

• Network of crude oil and refined product pipelines
• Inland marine business
• Light-product terminals
• Storage caverns
• Refinery tanks
• Docks,
• Loading racks and associated piping
• Crude and light-product marine terminals

MPLX also owns crude oil and natural gas gathering systems, pipelines, and natural gas and NGL processing and fractionation facilities in key U.S. supply basins.

Pioneer Natural Resources

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This is a stock many Wall Street analysts love for a pure crude oil play that employs a variable dividend strategy and pays a massive 6.32% dividend. (NYSE: PXD) operates as an independent oil and gas exploration and production company in the United States.

The company explores, develops, and produces oil, natural gas liquids (NGLs), and gas.

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

Last October, Exxon Mobil Corporation (NYSE: XOM) and Pioneer Natural Resources jointly announced a definitive agreement for ExxonMobil to acquire Pioneer. The merger is an all-stock transaction valued at $59.5 billion, or $253 per share, based on ExxonMobil’s closing price on October 5, 2023. Under the terms of the agreement, Pioneer shareholders will receive 2.3234 shares of ExxonMobil for each Pioneer share at closing. The implied total enterprise value of the transaction, including net debt, is approximately $64.5 billion.

Plains All American Pipeline

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This stock has been locked in a tight trading range, looks ready to break out, and pays a fat 8.20% dividend. Plains All American Pipeline, L.P. (NYSE: PAA), through its subsidiaries, engages in the pipeline transportation, terminalling, storage, and gathering of crude oil and natural gas liquids (NGL) in the United States and Canada.

The company operates in two segments:

• Crude Oil
• Natural Gas Liquids (NGL).

The Crude Oil segment offers:

• Gathering and transporting crude oil through pipelines
• Gathering systems,
• Trucks, barges, or railcars
• This segment provides terminalling, storage, and other facilities-related services and merchant activities

The Natural Gas Liquids segment provides:

• Gathering
• Fractionation
• Storage
• Transportation
• Terminalling activities
• This segment also involves ethane, propane, normal butane, iso-butane, natural gasoline, and crude oil refining processes.