Oil has taken a beating lately as the black gold has suffered from a rising dollar, though it has had a strong run off of the lows posted in 2016. One thing that has hurt some of the larger capitalization integrated companies, in addition to the recent decline in oil pricing, was some pretty poor second-quarter results, which made some investors jettison the shares.

In a new Jefferies research report, the analysts acknowledge the disappointing results but also note that while the near term is still somewhat rocky, the long-term picture remains positive.

The report said:

Operational performance was affected by heavy maintenance, but we note that production guidance was then broadly raised. That said, we do find cash generation encouraging, with every company covering its full dividend with free-cash-flow and share repurchases accelerating. We remain constructive on the broader oil macro and expect it to help support the integrateds. The stocks are trading with free-cash-flow on 2019 of nearly 9% and we remain constructive on the oil macro.

The analysts are bullish on three of the top integrated stocks, and all are rated Buy at Jefferies.

Chevron

This integrated giant is a safer way for investors looking to stay or get long the energy sector, and it has big Permian Basin exposure. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company, with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals.

The company sports a sizable dividend and has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG). Some on Wall Street estimate that the company will have a compound annual growth rate of over 5% for the next five years.

With Permian production and asset disposals targets reset, the company can raise the dividend 20% and buyback 15% of shares. Many analysts view the strategy update as appropriately conservative for one of the more oil-levered majors. The Chevron strategy through 2020 is focused on discipline, enabled by step change in capital efficiency driven by doubling Permian production.

Chevron missed second-quarter earnings expectations, but a share buyback resumption and solid operating outlook largely wiped away concerns. The company is estimated by some to be able to generate $30 billion in free cash flow in 2020. After that, portfolio oil leverage allows Chevron to grow the dividend and expand share buybacks.

Chevron shareholders are paid an outstanding 3.83% dividend. The Jefferies price target for the shares is $157, and the Wall Street consensus target was last seen at $146.92. The stock closed trading on Wednesday at $116.82 a share.

Occidental Petroleum

This is one of the highest yielding domestic stocks in the energy sector. Occidental Petroleum Corp. (NYSE: OXY) is an oil-levered multinational organization with principal business segments in oil and gas and in chemicals. The oil and gas segment explores for, develops, produces and markets crude oil and natural gas, primarily in the U.S. Permian Basin, Colombia, Bolivia, Libya, Oman, Qatar and Yemen. The chemicals segment manufactures and markets basic chemicals, vinyls and performance chemicals.

With a rock-solid balance sheet and a commitment to dividend coverage, investors look safe for now. Occidental has paid quarterly cash dividends continuously since 1975, and it has increased its dividend each year since 2002.

When Jefferies analysts raised the stock from Hold to Buy in June, the report noted this:

We upgrade Oxy to Buy from Hold and increase our target price. We believe that the company’s firm transportation commitments leave it well positioned to reap the benefits of what could be a prolonged wide differential between Midland and US gulf coast crude prices. Occidental has firm transportation commitments of 470,000 barrels per day from Midland to the Gulf Coast, about 19.5% of total capacity, which provides full flow assurance on its own Permian production as well as arbitrage opportunity on third party volumes.

Occidental shareholders are paid a very solid 4.06% dividend. Jefferies has a price target on the stock of $98, while the posted consensus target is $96.82. The stock closed trading most recently at $76.93.

Royal Dutch Shell

This company has survived the seesaw in oil pricing as good as or better than any other major integrated. Royal Dutch Shell PLC (NYSE: RDS-A) operates as an independent oil and gas company worldwide through its Upstream and Downstream segments. The company explores for and extracts crude oil, natural gas and natural gas liquids.

Royal Dutch Shell also converts natural gas to liquids to provide fuels and other products; markets and trades crude oil and natural gas; transports oil; liquefies and transports gas; extracts bitumen from mined oil sands and converts it to synthetic crude oil; and generates electricity from wind energy.

In addition, the company engages in the conversion of crude oil into a range of refined products, including gasoline, diesel, heating oil, aviation fuel, marine fuel, liquefied natural gas for transport, lubricants, bitumen and sulphur; production and sale of petrochemicals for industrial customers; refining; trading and supply; pipelines and marketing; and alternative energy businesses.

The Jefferies analysts have remained bullish on the company and noted this in a prior report:

We believe Shell has one of the most sustainable business models in the sector, capable of fully funding the dividend with free cash flow when oil prices are at the bottom of the cycle but also generating strong free cash flow in a moderate oil price environment. The balance sheet is on a path to reach 20% net debt/capitalization in 2018, and we expect the company to begin repurchasing shares in the second half of 2017 with a target of $25 billion in total repurchases through 2020. Shell’s well-covered dividend remains the highest in the sector.

Investors in Royal Dutch Shell are paid a huge 5.14% dividend. The $87 Jefferies price objective compares with the posted consensus figure of $81.01. The shares closed Wednesday’s trading at $62.23 apiece.

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Three of the biggest and best companies in the energy sector, many of which have all taken a good hit recently, and all are well liked on Wall Street. Paying good dividends and distributions, they make sense for long-term growth portfolios that also value consistent income and seek energy exposure.

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