One thing has become blatantly obvious as the Organization of the Petroleum Exporting Countries (OPEC) struggled when oil fell back into the $40s in December and January. The organization is committed to propping the price up, even if it means losing market share to U.S. producers, especially the big shale players. With Morgan Stanley out this week saying that there was the potential for Brent crude to hit $75 a barrel in the third quarter, that would probably mean the mid-$60s for West Texas Intermediate, based on the current spread.

With oil hitting the $60 mark on Wednesday, the highest print this year, that means there probably is still upside, and there is a good chance that OPEC rolls over the production cuts this summer, or even moves them higher. Toss in the potential for continued restrictions on Iran and Venezuela, and you have the potential for a supply problem.

We screened the Merrill energy research universe looking for large-cap plays that are rated Buy and pay solid dividends. Four look like very good stocks to buy now, as spring is here, and summer right around the corner.

Anadarko Petroleum

This top stock is still down a 30% from highs printed in October, and it is also a solid liquefied natural gas (LNG) play. 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 (NGLs). The other segments are Midstream and Marketing.

Anadarko has the capacity to sustain planned stock buybacks at current levels, providing support to close a value gap that many on Wall Street see at 50%. Strong free cash flow, enabled by advantaged Brent leverage, has competitive free cash compared with traditional large-cap “yield” names, but with competitive growth potential. The company has made a transition toward compelling value with growth and yield.

Anadarko Petroleum shareholders are paid a 2.72% dividend. The Merrill Lynch price target for the stock is a whopping $80. That compares with the Wall Street consensus price objective of $68.17. The shares closed trading Wednesday at $45.40 apiece.

Exxon Mobil

This remains a top Wall Street energy pick and has bounced back nicely from the December lows. 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.

For 75 years in a row, Exxon Mobil has its dividend. Thanks to its vertically integrated model in the oil and gas business, its profitability doesn’t suffer through commodity price swings like a company that’s a pure play in one segment of the value chain.

Shareholders of Exxon are paid a nifty 4.03% dividend. Merrill Lynch has a price objective of $105, while the posted consensus target price is just $83.99. The stock closed Wednesday at $81.32 a share.

Hess

This top mid/large cap pick is down 20% from highs printed last October and is on the Merrill Lynch US 1 list. Hess Corp. (NYSE: HES) is an exploration and production company that develops, produces, purchases, transports and sells crude oil, NGLs and natural gas. It primarily operates in the United States, Denmark, Equatorial Guinea, the Joint Development Area of Malaysia/Thailand, Malaysia and Norway.

The Merrill analysts are extremely bullish on the shares as they see multiple catalysts for the company this year. A recent research piece noted this:

With an inflection in free cash flow in the Bakken from 2020 and first oil from Guyana, we expect a dividend raise next year, the first since 2013. Management suggests a long term dividend target of ~$450 million may be appropriate, leaving headroom for significant share buy backs. While the share price has led many sector peers in 2019, we believe investor patience is starting to pay off with substantial exploration option value remaining, perhaps best characterized by Hess CEO John Hess: “we know we’re sitting on a pot of gold”

Hess shareholders are paid a 1.66% dividend. The $82 Merrill Lynch price target compares with a much lower consensus target of $65.50. The stock was last changing hands on Wednesday at $59.95, up well over 3% on the day.

Royal Dutch Shell

This is a top international play for investors looking to add energy exposure, and it posted solid fourth-quarter results. 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 NGLs.

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, 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.

Merrill Lynch remains bullish on the shares and noted this when the company released earnings:

Fourth quarter 2018 saw solid earnings (8% beat vs. consensus) and $12.2 billion organic operating cash flow ahead of our already above-consensus estimate. $27 billion organic free cash flow in fiscal year 2018 significantly de-risks the company’s outlook for $25-30 billion in 2020 – funding $25 billion buybacks. Ongoing buybacks also underline continued capex discipline.

Investors here are paid a huge 4.96% dividend. Merrill Lynch has set a $70 price objective. The posted consensus figure was last seen at $78.13, and the stock closed most recently at $64.48 per share.

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These four top stocks to Buy now all still have good upside to the Merrill Lynch price targets. Plus, they are all good investments for more conservative accounts looking to add energy exposure but wanting lower volatility.

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