This time, a year ago, West Texas Intermediate (WTI) was trading in the $90 range, but since a peak of $83.57 in late April, the price for the benchmark giant has traded flat for the past five months until ripping higher recently to $79.80. This comes at a bad time for the Federal Reserve as inflation has kept steady to moderately lower but still well above the 2% benchmark, and a rise in oil and gasoline prices could set the stage for a move higher later this year.
The wildcard for the black gold is the Middle East, with tensions racing higher since the massacre in October of 2023. While it appears there may be a deal between Hamas and Israel, the concerns have spread to Lebanon with Hezbollah and with the Houthis, who are based in Yemen. All this comes as the sanctions placed upon Russia, which are the harshest yet, are taking a toll on the supply they try to sell and deliver. Last but not least, there are rising tensions with Iran, which likely will face renewed sanctions as well with a new administration.
One of the best places for energy investors concerned with an overbought and bloated stock market is to look at the large-cap integrated giants that offer scale and cash flow from multiple silos in the industry. We screened our 24/7 Wall St. integrated high-yield dividend database for the best bets with the highest payout for shareholders. Four top companies that are Buy-rated on Wall Street look very tempting now.
Why do we cover large-cap energy dividend stocks?
Energy dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
Chevron
Chevron is an American multinational energy corporation specializing in oil and gas.
This integrated giant is a safer way for investors looking to position themselves in the energy sector. It pays a rich 4.12% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries. The company operates in the following two segments.
The Upstream segment is involved in:
- Exploration, development, production, and transportation of crude oil and natural gas
- Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
- Transportation of crude oil through pipelines
- Transportation, storage, and marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstream segment engages in:
- Refining crude oil into petroleum product
- Marketing crude oil, refined products, and lubricants
- Manufacturing and marketing renewable fuels
- Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
- Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives
Chevron announced in the fall of 2023 that it has entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of Hess’s outstanding shares in an all-stock transaction valued at $53 billion, or $171 per share, based on Chevron’s closing price on October 20, 2023. Under the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion. The Federal Trade Commission approved the purchase with some caveats last fall, and the long-awaited deal should close this summer.
UBS has a Buy rating with a hefty $195 target price.
Exxon Mobil
Exxon Mobil manages an industry-leading portfolio of resources and is one of the world’s largest integrated fuels, lubricants, and chemical companies.
The slow but steady increase in oil prices still offers investors an excellent entry point, and they will gladly grab a strong 3.55% dividend. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company, exploring for and producing crude oil and natural gas in:
- The United States
- Canada
- South America
- Europe
- Africa
- Asia
- Australia/Oceania
Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and transports and sells crude oil, natural gas, and petroleum products.
Top Wall Street analysts expect Exxon to remain a key beneficiary in a higher oil price environment, and most remain quite optimistic about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to further demand recovery. ExxonMobil offers greater Downstream/Chemicals exposure than its peers.
Exxon has completed its purchase of oil shale giant Pioneer Natural Resources in a $59.5 billion all-stock purchase. The deal created the largest U.S. oil field producer and guaranteed a decade of low-cost production.
UBS’s Buy rating comes with a significant $147 price objective.
Shell
Shell is a British multinational oil and gas company headquartered in London, England.
This foreign energy giant offers investors a hefty 4.15% dividend and big upside potential. Shell PLC (NYSE: SHEL) is an energy and petrochemical company in Europe, Asia, Oceania, Africa, the United States, and the Rest of the Americas.
The company operates through six segments:
- Integrated Gas
- Upstream
- Marketing
- Chemicals and Products
- Renewables
- Energy Solutions
It explores and extracts crude oil, natural gas, and natural gas liquids; markets and transports oil and gas; produces gas-to-liquids fuels and other products; and operates upstream and midstream infrastructure to deliver gas to the market.
The company also markets and trades natural gas, liquefied natural gas (LNG), crude oil, electricity, and carbon-emission rights; it also markets and sells LNG as a fuel for heavy-duty vehicles.
In addition, it trades in and refines crude oil and other feedstocks, such as:
- Low-carbon fuels
- Lubricants
- Bitumen
- Sulphur
- Gasoline
- Diesel
- Aviation and marine fuel
- Produces and sells petrochemicals for industrial use
- Manages oil sands activities
Further, the company produces base chemicals comprising ethylene, propylene, aromatics, and intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide, and ethylene glycol.
Shell generates electricity through wind and solar resources, produces and sells hydrogen, and provides electric vehicle charging services.
Jefferies has a Buy rating and a $79.20 price target for the stock.
TotalEnergies
TotalEnergies is a French multinational integrated energy and petroleum company founded in 1924.
This French-integrated giant is another excellent way to play the energy sector from the European side. It sports a hefty 5.76% dividend. TotalEnergies S.E. (NYSE: TTE) is an integrated oil and gas company worldwide.
The company operates through four segments:
- Exploration and production
- Integrated Gass
- 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, as well as energy efficiency services
- Development and operation of biomethane production units
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
UBS has set a $72.74 price target for the stock, with a Buy rating.
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