While it has been a huge relief to beleaguered and inflation-battered consumers across the United States, oil prices could be set to explode higher. The Organization of the Petroleum Exporting Countries (OPEC) will meet later this week to discuss lowering production by a million barrels per day, perhaps even more. The move is an effort to support prices that have crumbled from over $120 a barrel in late June. This also would mark the second monthly cut in a row, as the cartel already reduced production in September by 100,000 barrels per day.
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Despite the big Monday gains, Brent and West Texas Intermediate crude still trade well below the $100 level. That is a far cry from the intraday highs hit earlier this year. What makes sense for investors now is to grab the big dividend energy giants that are on sale, as they all trade well below their 52-week highs hit earlier this year.
We screened our 24/7 Wall St. energy research database looking for large-cap energy leaders that paid substantial and dependable dividends, and that are Buy-rated at top Wall Street firms. Seven companies made the grade. It is important to remember that no single analyst report should be used as the sole basis for any buying or selling decision.
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Chevron
This integrated giant is a safer way for investors looking to get positioned in the energy sector. Chevron Corp. (NYSE: CVX | CVX Price Prediction) engages in integrated energy and chemicals operations worldwide. The company operates through two segments.
The Upstream segment is involved in the exploration, development, production and transportation of crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas (LNG); transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as operating a gas-to-liquids plant.
Chevron’s Downstream segment engages in refining crude oil into petroleum products; marketing crude oil, refined products and lubricants; manufacturing and marketing of renewable fuels; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It is also involved in cash management and debt financing activities, insurance operations, real estate activities and technology businesses.
Chevron stock comes with a 3.95% dividend, and Credit Suisse has a $202 target price. The consensus target is $180.76. Shares closed on Monday at $151.73, a gain of almost 6% on the day.
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ConocoPhillips
This is another large-cap company that offers strong value for investors. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, LNG and natural gas liquids (NGLs) worldwide.
Conoco’s 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 sizable position in the Permian Basin.
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Investors receive a 1.88% dividend. The BofA Securities price target is a Wall Street high of $140. ConocoPhillips stock has a consensus target of $124.74, and shares closed on Monday at $109.97.
Exxon Mobil
This mega-cap energy leader trades at levels that 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.
Top Wall Street analysts expect Exxon to remain a key beneficiary in this higher oil price environment, and most remain strongly positive about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to a further demand recovery, with Exxon Mobil offering greater downstream/chemicals exposure relative to peers.
Shareholders receive a 4.03% dividend. The $123 BofA Securities price target is well above the $106.58 consensus target. Exxon Mobil stock closed over 5% higher on Monday at $91.92.
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Marathon Petroleum
This is another solid way for investors who are more conservative to play the energy sector. Marathon Petroleum Corp. (NYSE: MPC) operates as an integrated downstream energy company, primarily in the United States.
The Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent and West Coast regions of the United States. It purchases refined products and ethanol for resale. Its refined products include transportation fuels, such as reformulated and blend-grade gasolines, as well as heavy fuel oil and asphalt.
This segment also manufactures aromatics, propane, propylene and sulfur. It sells refined products to wholesale marketing customers in the United States and internationally, buyers on the spot market and independent entrepreneurs who operate primarily Marathon branded outlets, as well as through long-term fuel supply contracts to direct dealer locations primarily under the ARCO brand.
The Midstream segment transports, stores, distributes and markets crude oil and refined products through refining logistics assets, pipelines, terminals, towboats and barges. It gathers, processes and transports natural gas, and it gathers, transports, fractionates, stores and markets NGLs. As of December 31, 2021, the company operated 7,159 brand jobber outlets in 37 states, the District of Columbia and Mexico through independent entrepreneurs.
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The dividend yield here is 2.35%. Raymond James has set its price target at $133, while the consensus is lower at $123.50. Marathon Petroleum stock closed on Monday at $102.79 a share, which was a gain of over 3% for the day.
Shell
This European energy giant offers investors size and strength. Shell PLC (NYSE: SHEL) operates as an energy and petrochemical company in Europe, Asia, Africa, the Americas and elsewhere.
Shell explores for and extracts crude oil, natural gas and NGLs. It markets and transports oil and gas, produces gas-to-liquids fuels and other products, and operates upstream and midstream infrastructure necessary to deliver gas to market. The company also markets and trades natural gas, LNG, crude oil, electricity and carbon-emission rights, and it markets and sells LNG as a fuel for heavy-duty vehicles and marine vessels.
In addition, the company trades in and refines crude oil and other feed stocks, such low-carbon fuels, lubricants, bitumen, sulfur, gasoline, diesel, heating oil, aviation fuel and marine fuel. It produces and sells petrochemicals for industrial use, and it manages oil sands activities. Further, the company produces base chemicals, comprising ethylene, propylene and aromatics, as well as intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide and ethylene glycol.
The company also generates electricity through wind and solar resources, produces and sells hydrogen, and provides electric vehicle charging services, as well as electricity storage.
Shareholders receive a 4.02% dividend. Shell stock has a $72 target price at BofA Securities, and the consensus target is $69.31. Monday’s close at $52.33 was up over 5% on the day.
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TotalEnergies
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.
The 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.
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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 5.92% dividend. The BofA Securities price target of $77 compares with a $69.41 consensus target and the $49.23 close for TotalEnergies stock on Monday. That was almost 6% higher on the day.
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Valero Energy
This Wall Street favorite is a solid energy play for conservative investors looking for safer ideas. Valero Energy Corp. (NYSE: VLO) is one of the largest independent petroleum refining and marketing companies in the United States. It is based in San Antonio, Texas; owns 13 refineries in the United States, Canada and Europe; and has a total throughput capacity of around 2.5 million barrels per day.
The company also is a joint venture partner in Diamond Green Diesel, which operates a renewable diesel plant in Norco, Louisiana. Diamond Green Diesel is North America’s largest biomass-based diesel plant.
Valero sells its products in the wholesale rack or bulk markets in the United States, Canada, the United Kingdom, Ireland and Latin America. Approximately 7,400 outlets carry Valero’s brand names.
Valero Energy stock investors receive a 4.69% dividend. The Piper Sandler analysts have set a $148 price target. The consensus target is lower at $135.32, and shares closed 5% higher on Monday at $112.31.
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These seven energy giants can continue to profit from the potential for higher energy prices but offer investors who are more conservative a safer way to play the sector. With everything from the world’s largest integrated energy giants to two of the biggest refining companies and European mega-cap leaders, these are seven ways to generate income and participate in what could be a strong fourth-quarter rally for the sector.
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