After a dreadful November sell-off, West Texas Intermediate crude oil has roared back past the $75 a barrel level and looks to be headed to $80, as OPEC has given every indication that they will be holding current production levels to protect that $75 and higher price point. While all the shut-in Gulf of Mexico production has returned to 100% since hurricane Ida, Permian Basin producers have continued to watch their production levels as free cash flow is now the name of the game over production growth.
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Many top oil strategists across Wall Street are warning that severe shortages of oil and natural gas could be headed our way in 2022. Goldman Sachs noted recently that oil could hit $100 a barrel, as demand might reach a new record high in the next two years. The Goldman Sachs analysts predict a new high in oil demand in 2022 and again in 2023. Both international benchmark Brent crude and U.S. crude prices spiked above $80 before the November sell-off, as demand continues to outstrip supply.

We screened our 24/7 Wall St. database looking for the best dividend-paying energy stocks rated Buy at major Wall Street firms and found four that are cheap and have some serious upside potential. While we focused on companies that are rated Buy, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

BP

This is one of the premier European integrated oil giants, and Goldman Sachs is very positive on the shares. BP PLC (NYSE: BP) engages in the energy business worldwide. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture, usage and storage.

The company is also involved in the convenience and mobility business, which manages the sale of fuels to wholesale and retail customers, convenience products, aviation fuels, and Castrol lubricants. It is involved in refining, supply and trading of oil products, as well as operation of electric vehicle charging facilities. In addition, it produces and refines oil and gas, and it invests in upstream, downstream and alternative energy companies, as well as in advanced mobility, bio and low carbon products, carbon management, digital transformation and power and storage areas.

Shareholders receive a 4.69% yield. The Goldman Sachs price target for domestic BP stock shares is $45, which compares with a $34.17 consensus target. The final trade Thursday was reported at $26.69 per share.

This energy giant is a solid way for investors who are more conservative to be positioned in the sector. 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 it has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG).
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With the strongest financial base of the majors, coupled with an attractive relative asset base, many on Wall Street feel that Chevron offers the most straightforwardly positive risk/reward. Although current conditions do not warrant a large focus on production growth, Chevron possesses numerous medium-term drivers that should support production levels in the coming years.

Chevron stock investors receive 4.54% dividend, which analysts feel comfortable will remain at current levels. BofA Securities has a $140 price target, while the consensus target is $123.64. The stock closed on Thursday at $117.43 a share.

Exxon Mobil

Shares of this mega-cap energy leader backed up nicely as oil sold off in August, and they still offer investors an excellent entry point. 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.

Exxon 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.

The company announced last month that ExxonMobil Catalysts and licensing has introduced ExxonMobil Renewable Diesel (EMRD) process technology to help meet the evolving needs for mobility, while utilizing renewable feedstock. This new process technology converts feedstocks including, but not limited to, vegetable oils, unconverted cooking oil and animal fats, into renewable diesel. Due to significant interest in producing renewable jet fuel as a primary product, Exxon is also developing advanced catalyst and process technology solutions that will offer EMRD process licensees flexibility to tailor the amount of jet fuel versus diesel produced.

The company pays investors a 5.76% dividend, which will continue to be defended. The $95 BofA Securities price target is well above the $68.40 consensus target for Exxon Mobil stock. Shares closed at $60.79 on Thursday.

This French integrated giant is another great way to play an energy rally from the European side. TotalEnergies S.E. (NYSE: TTE) operates as an integrated oil and gas company worldwide. Its Exploration & Production segment engages in oil and natural gas exploration and production activities in approximately 50 countries.
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The company’s Integrated Gas, Renewables & Power segment engages in the 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; and development and operation of biomethane production units, as well as provides energy efficiency services.

The Refining & Chemicals segment refines petrochemicals, including olefins and aromatics; and polymer derivatives, such as polyethylene, polypropylene, polystyrene and hydrocarbon resins, as well as biomass conversion and elastomer processing. This segment also engages in trading and shipping crude oil and petroleum products.

The 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 provides fuel payment solutions. It operates approximately 15,500 service stations.

Investors receive a 4.84% dividend. BofA Securities has set a $71 price target. The consensus target is $59.38, and TotalEnergies stock closed on Thursday at $49.97.

All four of these mega-cap integrated leaders pay very solid dividends and they all dominate in their geographical locations. Plus, their stocks have some serious upside to the various price targets while perhaps offering more safety for investors with less risk tolerance.

One caveat for investors considering the two European ideas is that many foreign governments automatically withhold taxes on dividends paid by companies incorporated within their borders. For most taxable accounts, this means that the broker will withhold a certain percentage of the dividend.

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