One thing has always been a constant for the leading oil-producing countries in the Middle East: They don’t really have any other exports of note. The longer prices stay low, the worse the situation gets for all of them. In fact, even Iran, which gladly came back into the market once restrictions were  lifted, is well aware of the fact that its neighbors are in favor of a production cut.

Reuters reported that Iranian Oil Minister Bijan Zanganeh expressed optimism on Saturday about an upcoming OPEC meeting and said crude prices could jump to $55 a barrel if an agreement is reached and non-OPEC producers cooperate. That could give a boost to top U.S. producers if an agreement could be achieved. We screened the Merrill Lynch research universe for top oil companies that are rated Buy that pay a dividend. We found four that look safe and timely now.

ConocoPhillips

This company may offer investors solid upside potential despite the big dividend cut earlier this year. ConocoPhillips (NYSE: COP) explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. Its 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 sizeable position in the Permian. The company remains one of the best values as short sellers circled after the dividend cuts and many still remain short the stock.

Conoco Investors are paid a 2.23 % dividend. The Merrill Lynch price target on the company is $80. The Wall Street consensus price target for the stock is posted much lower at $53.57. Conoco closed Friday at $44.76.

Hess

This top mid/large cap pick is down a stunning 50% since highs printed in 2014. Hess Corporation (NYSE: HES) is an exploration and production company that develops, produces, purchases, transports, and sells crude oil, natural gas liquids, and natural gas. The company primarily operates in the United States, Denmark, Equatorial Guinea, the Joint Development Area of Malaysia/Thailand, Malaysia, and Norway.

Hess is continuing a transition from an integrated oil and gas company to a predominantly E&P entity. The company is shifting its growth approach from high-impact exploration to a smaller, more focused exploration portfolio. Hess released a much lower capital expenditure budget for 2016, which highlights the company’s efforts for cost containment.

Hess investors are paid a 1.96% dividend. The Merrill Lynch price objective is $85, and the consensus is much lower at $64.39. The stock closed Friday at $50.97.

Occidental Petroleum

This stock is a top energy stock that is another one of the higher yielding domestic stocks in the energy sector. Occidental Petroleum Corporation (NYSE: OXY) is an oil-levered multinational organization whose principal business segments are oil & gas and chemicals. The oil and gas segment explores for, develops, produces, and markets crude oil and natural gas primarily in the US 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 has increased its dividend each year since 2002.

Shareholders are paid a solid 4.17% dividend. The Merrill Lynch price target for the company is $87, and the consensus price target is set at $77.71. Shares closed on Friday at $68.22.

Royal Dutch Shell

This company has survived the plunge in oil pricing as well or better than any other major integrated stock. Royal Dutch Shell plc (NYSE: RDS-A) operates as an independent oil and gas company worldwide. It operates through 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 (LNG) 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 company generated 3.83 billion cubic feet per day of natural gas in the second quarter of this year from its integrated gas operations and another 6.40 billion cubic feet per day from its upstream operations. The company produced solid third quarter results that exceed the Merrill Lynch expectations. They noted this in a recent research report:

We increase our estimates and price objective as a result of results – remaining above consensus. We reiterate our Buy rating and continue to see Royal Dutch Shell as our preferred Integrated Oil Supermajor.

Royal Dutch Shell investors are paid a huge 6.5 % dividend. The Merrill Lynch price target is posted at $58, and the consensus price target for the euro oil giant is $59.94. The shares closed Friday at $49.22.

While Iran is giddy that it is free to export again,  it needs to consider its neighbors, and it appears the country is starting to get the point that production levels need to be cut. All of these stocks make good sense for long-term growth and income portfolios.

 

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