Oil is trading at the highest level in over a decade, and there is every reason to believe that the price of the black gold may stay above $100 a barrel for some time. Warren Buffett thinks so, as he has been loading up Berkshire Hathaway with some massive new buys at what some thought were reasonably high prices.

The bottom line for investors is that between the issues related to the Russia-Ukraine war, the policies of the Biden administration and a lack of exploration during the COVID-19 pandemic, the table was set for higher prices, and it may stay that way.

We screened our 24/7 Wall St. energy research universe looking for the stocks within the sector that are Buy rated and pay among the highest dividends. We included exploration and production companies, natural gas leaders, energy master limited partnerships (MLPs) and refiners. Seven top companies hit our screens. While all 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.

Devon Energy

This may be one of the best value propositions in the sector, as it uses the variable dividend strategy. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs) in the United States and Canada. It operates approximately 19,000 wells.

The company also offers midstream energy services, including gathering, transmission, processing, fractionation and marketing to producers of natural gas, NGLs, crude oil and condensate through its natural gas pipelines, plants and treatment facilities.

Production is weighted toward crude oil while growth opportunities are liquids focused, anchored by the Delaware Basin, SCOOP/STACK, Eagle Ford Shale, Canadian Oil Sands, and the Barnett. Devon also owns equity in the publicly traded midstream MLP EnLink.

Shareholders now receive a 7.16% dividend. Truist Financial has a $100 target price on Devon Energy stock. The consensus target is $76.18, and shares closed on Monday at $70.99.

Enterprise Products Partners

This is the largest publicly traded energy partnership and a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) provides a wide variety of midstream energy services, including gathering, processing, transportation and storage of natural gas, NGLs fractionation, import and export terminaling, and offshore production platform services.

One reason many analysts may have a liking for the stock might be its distribution coverage ratio. This ratio is well above 1 times, making it relatively less risky among the MLPs.

Enterprise Products Partners stock investors receive a 7.03% distribution. The Goldman Sachs price target is $30, in line with the $30.71 consensus target. Shares closed at $26.46 on Monday.

MPLX

This is the top holding for the Alerian MLP energy exchange-traded fund. MPLX L.P. (NYSE: MPLX) is primarily engaged in crude oil and refined products transportation and terminaling in the U.S. Midwest and Gulf Coast regions, as well as natural gas gathering and processing in the northeast from its prior acquisition of MarkWest Energy in 2015. MPLX was formed by independent U.S. refiner Marathon Petroleum.
The company’s assets include a network of crude oil and refined product pipelines; an inland marine business; light-product terminals; storage caverns; refinery tanks, docks, loading racks and associated piping; and crude and light-product marine terminals. It also owns crude oil and natural gas gathering systems and pipelines, as well as natural gas and NGL processing and fractionation facilities in key U.S. supply basins.

Investors receive a 9.11% distribution. The $39 Raymond James price target compares with a $38 consensus target on MPLX stock and Monday’s closing price of $30.95.

ONEOK

The solid price of natural gas over the past year has helped to lift this top energy company. ONEOK Inc. (NYSE: OKE) primarily engages in natural gas transportation, storage and natural gas and NGLs gathering, processing and fractionation in the Bakken, Mid-Continent and Permian. The company recently closed the roll-up of its underlying MLP, ONEOK Partners.

The company has a strong presence in the Oklahoma SCOOP/STACK (NGL gathering/takeaway system, G&P), the Williston Basin (G&P, NGL takeaway) and the Permian Basin (NGL gathering, NGL takeaway, natural gas takeaway), which analysts feel provides high-return growth opportunities.

Many on Wall Street remain very positive on the company’s primarily fee-based earnings, which account for 90% of total earnings.

Investors receive a 5.74% dividend. Raymond James has set its price target at $75. The consensus target is $72.11. ONEOK stock closed on Monday at $65.19.

Phillips 66

This extremely diversified energy company has a long and successful operating history. Phillips 66 (NYSE: PSX) operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties. The company holds many of these assets within its MLP, Phillips 66 Partners.

The company is able to benefit from the tax-advantaged structure while still operating a more diversified operating business that also contains many assets that are not ideal MLP assets, such as its fast-growing chemical manufacturing business and its super-profitable refined products marketing business.

Phillips 66 remains a top refining idea across Wall Street, where many continue to see headroom for incremental capital returns. Most analysts are very constructive on a positive rate of change at Refining in 2022 at the company. In addition, they continue to see attractive non-refining value in the other segments.

Investors receive a 4.00% dividend. The price target on Phillips 66 stock at Piper Sandler is $119, which is well above the $103.79 consensus target. The shares closed on Monday at $97.08.

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.

Its Integrated Gas, Renewables & Power segment engages in the liquefied natural gas (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 4.48% dividend. The BofA Securities price target is $83. The consensus target is $65.98, and TotalEnergies stock closed at $54.34 on Monday.

Williams Companies

This top energy company is a solid pick for investors who are more conservative and looking for exposure to LNG. Williams Companies Inc. (NYSE: WMB) operates as an energy infrastructure company primarily in the United States.

Its Transmission & Gulf of Mexico segment comprises Transco and Northwest natural gas pipelines, as well as natural gas gathering and processing, and crude oil production handling and transportation assets in the Gulf Coast region. The Northeast G&P segment engages in the midstream gathering, processing and fractionation activities in the Marcellus Shale region, primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio.

The West segment comprises gas gathering, processing and treating operations in the Rocky Mountain region of Colorado and Wyoming, the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of South Texas, the Haynesville Shale region of northwest Louisiana and the Mid-Continent region, which includes the Anadarko, Arkom, and Permian basins. It also includes NGL and natural gas marketing operations, as well as storage facilities.

Holders of Williams Companies stock receive a 4.80% dividend. The $40 price objective at Raymond James compares with a $37.55 consensus target and the most recent close at $35.44 a share.

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These seven energy companies can profit from higher energy prices and offer investors who are more conservative a solid way to play the sector. With everything from one of the world’s largest integrated energy giants, to the top energy MLPs and one of the biggest refining companies, seven ways to generate income and participate in the biggest rally in the energy and oil space since 2011, which looks to continue the rest of 2022 and beyond.

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