24/7 Insights
- West Texas Intermediate crude is trading at the lowest level since late January.
- Confusion over OPEC+ intentions may have spooked the market.
- Access 2 legendary, high-yield dividend stocks Wall Street loves.
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 could change since the current benchmarks have been trading in a range-bound level since 2022, and now both West Texas Intermediate (WTI) and Brent crude are back to the lower levels of their trading bands.
WTI has maintained a steady support level at the $70 to $72 level for nearly two years. However, the recent market turbulence, marked by a significant sell-off across the energy complex, can be attributed to the uncertainty surrounding OPEC+‘s plans to unwind some voluntary output cuts in October. This news triggered a selling spree, impacting the major indices, despite the subsequent announcement that OPEC+ will extend the curbs on production until the end of 2025.
While some voluntary cuts are due to be phased out, it’s a good bet that major players in the Middle East want to support pricing. Starting in October, oil output for eight countries, including Saudi Arabia, the United Arab Emirates and Iraq, could possibly gradually rise in monthly increments through 2025. Any prolonged weakness in pricing will put the kibosh on that fast.
24/7 Wall St. readers should consider buying some of the big dividend-paying energy giants now before they start of what is expected to be a very hot summer, and the traditional summer vacation driving season swings into full gear. With a rash of issues at the major airlines, you can bet many vacationers will be more than happy to drive to their destinations.
Four top high-yield dividend stocks make sense now and all are rated Buy at major Wall Street firms.
Civitas Resources
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Trading at a cheap 7.24 times trailing earnings with an 8.62% dividend 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 closed in January and combined with purchase of Tap Rock Resources and Hibernia Energy III, the company has closed $6.8 billion in Permian basin transactions.
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 8.26% distribution. 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 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 L.P. (NYSE: SUN), and the public partner interests and 39.7 million standard units of USA Compression Partners L.P. (NYSE: USAC).
Mach Natural Resources
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This company is trading below the initial price and will pay a reported gigantic 14% dividend based on estimates for the rest of the year. Mach Natural Resources L.P. (NYSE: MNR) is an independent upstream oil and gas company focused on the acquisition, development, and production of oil, natural gas, and natural gas liquids reserves in the Anadarko Basin region of Western Oklahoma, southern Kansas, and the Texas panhandle.
The analysts at Raymond James noted that Mach is led by Tom Ward, co-founder of Chesapeake Energy. Mach is another entrant into the E&P MLP space. It is a pure-play operator in the Anadarko Basin, leveraging its strong position (1 million net acres) to become the primary consolidator in the region.
Mach’s midstream position and lower base decline (~20%) allow the company to target a lower reinvestment rate (~30%) relative to the overall industry.
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Total Energies
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This French-integrated giant is another excellent way to play the energy sector from the European side. It sports a hefty 4.82% dividend. TotalEnergies S.E. (NYSE: TTE) is an integrated oil and gas company worldwide.
The company operates through four segments:
- Exploration and production
- Integrated gas
- Renewables and power
- Refining and chemicals and marketing and services
The company’s Exploration & Production segment involves oil and natural gas exploration and production activities in approximately 50 countries.
Its Integrated Gas, Renewables & Power segment engages in:
- Liquefied natural gas (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 TotalEnergies Refining & Chemicals segment refines petrochemicals, including olefins and aromatics, and polymer derivatives, such as polyethylene, polypropylene, polystyrene, and hydrocarbon resins. It also converts biomass and processes elastomers. This segment also trades and ships crude oil and petroleum products.
Its 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 fuel payment solutions
It also operates approximately 15,500 service stations.
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