Beleaguered consumers being hit with the worst rise in inflation in 40 years have been cheering the recent decline in the benchmark pricing for oil, and with good reason. In five states, gasoline prices have fallen below $3 a gallon, and they could drop below $4 on the West Coast soon. That is a huge drop considering oil was trading near $120 a barrel in June.
[in-text-ad]
On Monday, crude futures prices briefly hit their lowest levels since December of 2021 on the endless lockdowns in China, where demand has been crushed by the heavy hand of the Chinese Communist Party’s zero-Covid policy. It leads to one likely conclusion for investors now: Oil stocks are terribly overpriced and expensive, or the black gold is incredibly cheap. Many top strategists feel that triple-digit pricing could return by the spring of 2023.

While oil has fallen more than individual stocks, the discount to summer prices is still massive. So, we screened our 24/7 Wall St. energy research database looking for stocks that come with the biggest and most dependable dividends and are Buy rated by top Wall Street firms. While the six we found look outstanding, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Coterra Energy

This company was formed by the closing of the $17 billion merger of Cabot Oil & Gas and Cimarex Energy in 2021. Coterra Energy Inc. (NASDAQ: CTRA) is an independent oil and gas company engaged in the development, exploration and production of oil, natural gas and natural gas liquids (NGLs) in the United States. It primarily focuses on the Marcellus Shale, with approximately 177,000 net acres in the dry gas window of the play located in Susquehanna County, Pennsylvania.

The company also holds Permian Basin properties with approximately 306,000 net acres and Anadarko Basin properties located in Oklahoma with approximately 182,000 net acres. In addition, it operates natural gas and saltwater disposal gathering systems in Texas. The company sells its natural gas to industrial customers, local distribution companies, oil and gas marketers, major energy companies, pipeline companies and power generation facilities.

As of December 31, 2021, it had proved reserves of approximately 2,892,582 thousand barrels of oil equivalent, which include 189,429 thousand barrels of oil and other liquid hydrocarbons, 14,895 billion cubic feet of natural gas and 220,615 thousand barrels of natural gas liquids.

Coterra Energy stock investors receive a 9.17% dividend. Stifel’s $40 target price compares with a  $36.13 consensus target and the most recent close at $28.07, which was up over 3% on Tuesday.

Magellan Midstream Partners

This top midstream master limited partnership checks in high on the distribution list. Magellan Midstream Partners L.P. (NYSE: MMP) engages in the transportation, storage and distribution of refined petroleum products and crude oil in the United States.

The company operates refined products pipelines that transport gasoline, diesel fuel, aviation fuel, kerosene and heating oil to refiners, wholesalers, retailers, traders, railroads, airlines and regional farm cooperatives, as well as to end markets, including retail gasoline stations, truck stops, farm cooperatives, railroad fueling depots, military bases and commercial airports.
Magellan Midstream Partners also provides pipeline capacity and tank storage services, as well as terminaling, ethanol and biodiesel unloading and loading, additive injection, custom blending, laboratory testing and data services to shippers.

In addition, the company owns and operates crude oil pipelines and storage facilities as well as marine terminals located along coastal waterways that provide distribution, storage, blending, inventory management and additive injection services for refiners, marketers, traders and other end users of petroleum products.
[in-text-ad]
Shareholders receive an 8.08% distribution. Goldman Sachs has a $59 price objective on Magellan Midstream Partners stock. The consensus target is $56.21, and Tuesday’s close at $52.72 was up 2% on the day.

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 9.22% distribution. The $40 Wells Fargo price target is higher than the $38.42 consensus target for MPLX stock. Tuesday’s closing share price was $33.74.

ONEOK

The solid price of natural gas over the last year has helped to lift this top energy company, and it is a different way to play the energy sector. 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 positive on the company’s primarily fee-based earnings, which account for 90% of total earnings.

The dividend yield here is 5.72%. The Raymond James team has set a $65 price target, but the consensus target is $67.88. ONEOK stock closed on Tuesday at $64.91.

TotalEnergies

This French integrated giant is a great way to play a potential 2023 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 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.
[in-text-ad]
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.

TotalEnergies stock comes with a 4.52% dividend. The price target at BofA Securities is $92, well above the $71.71 consensus target and Tuesday’s close at $60.99.

Williams Companies

This top energy company is a very solid pick for more conservative investors looking for exposure to oil pricing, natural gas and 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.

The company owns and operates 30,000 miles of pipelines, 34 processing facilities, nine fractionation facilities and approximately 23 million barrels of NGL storage capacity.

Shareholders receive a 5.01% dividend. Raymond James’s Strong Buy rating comes with a $42 price target. The consensus target is $38.26, and Williams Companies stock closed at $34.32 on Tuesday.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

We decided to go with some of the top midstream energy stocks as the current lower prices for gasoline, diesel and jet fuel could very well spur demand from consumers through the rest of the year and in the first quarter of 2023. Toss in two very strong exploration and production leaders, and growth and income investors have six top stocks to choose from, all trading at some of the best levels in months.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.