Energy

Record US Oil Exports Could Go Higher: 3 Dividend Energy Stocks to Buy Now

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This year, exports from the United States of oil hit an incredible 2.2 million barrels per day. That is a remarkable number when you consider that a 40-year ban in oil exports, which was put in place as a result of the OPEC oil embargo in 1973, was just lifted in 2016. Now some are predicting that oil exports from the United States can jump to an astonishing 4 million barrels per day. If that’s the case, the flexible large majors are probably in great shape.

Since oil has backed up over the past month, dropping about 10%, and natural gas storage is at levels that are way below the five-year average, it makes sense to look at the top energy stocks. We screened the Merrill Lynch energy research universe looking for the top dividend-paying companies that are rated Buy. We found four that could be great four-quarter portfolio additions.

Anadarko Petroleum

This top company’s stock is still down a stunning 30% from highs printed in 2014, the last time oil traded at $70. Anadarko Petroleum Corp. (NYSE: APC) operates through three segments. The Oil and Gas Exploration and Production segment explores for and produces natural gas, oil, condensate and natural gas liquids. The other segments are Midstream and Marketing.

The company has reported impressive results this year, and Merrill Lynch said this in a recent research note:

Anadarko has the capacity to sustain buybacks at current levels, providing support to close a value gap we see at 50% Strong free cash flow, enabled by advantaged Brent leverage has a competitive free cash versus traditional large cap ‘yield’ names. …but with competitive growth. The company has made transition towards compelling value, with growth and yield.

Anadarko Petroleum shareholders are paid a 1.47% dividend. The Merrill Lynch price target on the shares is $90, while the Wall Street consensus price objective is $86.67. The shares closed trading on Thursday at $66.50 apiece.

Exxon Mobil

This remains a top energy pick and is on the US 1 list at Merrill Lynch. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

The company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.

Exxon reported second-quarter profits that fell short of analysts’ expectations, marking the fourth time in the past five periods the company has disappointed. The miss was largely due to weaker earnings in Exxon’s refining and marketing segment due to heavier-than-anticipated maintenance and operational problems. Exxon’s business producing oil and gas bolstered earnings, with the company saying it is favoring oil output over gas drilling in its U.S. shale fields. Third-quarter results are expected to be released on November 2nd.

Exxon investors are paid a very solid 4.02% dividend. Merrill Lynch has a $110 price objective, and the posted consensus target price is $89.69. The shares closed at $81.85 on Thursday.

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.

Shareholders receive a very solid 4.28% dividend. Merrill Lynch has set its price target at $103. The consensus target is $95.50, and the stock closed trading most recently at $71.90 a share.

Recent market volatility has again knocked these top stocks back down. All make sense for investors wanting to add energy stocks that are more conservative and pay dependable dividends.

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