The best-performing sector last year was energy, and with good reason, given that benchmark pricing in the summer of 2022 hit levels not seen in years. While those benchmark prices have sold off big since then, they are still well above the levels needed for oil companies to make solid money. With demand from China expected to surge as the year goes on, prices should follow. The recent selling is almost all related to the current issues with the banking industry, and patient investors who have been waiting for an opportunity to buy some of the biggest and best names in the sector are getting a very welcome pullback.
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We screened our 24/7 Wall Street energy research universe and found seven companies paying big and dependable dividends that are outstanding ideas for investors looking to get involved or add to existing positions. While shares of the top companies we are highlighting are Buy rated on Wall Street, 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 top Wall Street analysts are quite 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.

The company posted record 2022 earnings, along with the biggest profit in the 114-year history of the company. In addition, management announced a 10% increase in the dividend and an extra $2.75 billion of buybacks to an already big scheduled program.

Shareholders receive a 4.02% yield with the coming increase. Bernstein’s $39 target price for BP stock compares with a $44.32 consensus target and Wednesday’s close at $35.85.

Chevron

This energy giant is a solid play for investors who are more conservative and looking 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 has a solid place in natural gas and liquefied natural gas (LNG).
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.
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Chevron reported full-year 2022 earnings of $35.5 billion, well above the $15.6 billion in 2021, and increased its dividend by 6%. This increase puts Chevron on track to make 2023 the 35th consecutive year with an increase in annual dividend payout per share.

Currently, investors receive a 3.93% dividend, when the recent increase is factored in. The Raymond James price target of $212 is a Wall Street high, and Chevron stock has a consensus target of $192.63. The closing share price on Wednesday was $153.80.

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, natural gas liquids (NGLs) and LNG worldwide.

The company 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.

The company posted revenues that beat estimates, while earnings fell slightly behind the consensus forecast.

The dividend yield here is 2.43%. Truist Financial has a $151 price target, well above the $138.12 consensus target. ConocoPhillips stock closed on Wednesday at $95.24.

Exxon Mobil

This mega-cap energy leader trades at a reasonable valuation and still offers 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.
The top U.S. oil producer reported fourth-quarter 2022 earnings of $12.8 billion, or $3.09 per share, as well as full-year earnings of $55.7 billion, or $13.26 per share.

Exxon Mobil stock investors receive a 3.58% dividend. The price target at Mizuho is $147, while the consensus target is $127.33. Wednesday’s close was at $95.24.
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Occidental Petroleum

Over the past year, Berkshire Hathaway has been scooping up shares of this company. Occidental Petroleum Corp. (NYSE: OXY) engages in the acquisition, exploration and development of oil and gas properties in the United States, the Middle East, Africa and Latin America.

The company’s Oil and Gas segment explores for, develops, and produces oil and condensate, NGLs and natural gas. The Midstream and Marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide and power. This segment also trades around its assets, consisting of transportation and storage capacity, and it invests in entities.

The Chemical segment manufactures and markets basic chemicals, including chlorine, caustic soda, chlorinated organics, potassium chemicals, ethylene dichloride, chlorinated isocyanurates, sodium silicates and calcium chloride, as well as vinyls, comprising vinyl chloride monomer, polyvinyl chloride and ethylene.

Warren Buffett recently bought 5.8 million more shares of the oil company and now owns 200.2 million shares, worth a stunning $12.2 billion.

Shareholders receive a 1.27% dividend. Raymond James has a Strong Buy rating and an $80 price target. The lower $72.84 consensus target compares with Wednesday’s $56.80 closing print for Occidental Petroleum stock.

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.

Furthermore, Shell generates electricity through wind and solar resources, produces and sells hydrogen and provides electric vehicle charging services, as well as electricity storage.
Shell delivered a record $40 billion profit in 2022. It also posted a record fourth-quarter profit of $9.8 billion, after a strong recovery in earnings from LNG trading, beating analyst forecasts for an $8.0 billion profit. The company also increased its dividend by a strong 15%.

Shell stock comes with a 4.15% dividend after the increase. BofA Securities has set its target price at $74. The consensus target is $70.84, and the most recent close was at $55.55.
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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.

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.

Though finding comprehensive final earnings for the quarter proved to be difficult, the company still pays the highest dividend of all of the mega-cap integrated leaders.

Investors receive a 4.95% dividend. TotalEnergies stock has an $84 price target at BofA Securities. The consensus target is lower at $73.72, and shares ended Wednesday trading at $57.35.

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Given the shaky geopolitical state of the world, we decided to focus only on the mega-cap domestic and foreign sector leaders. Needless to say, if the current administration does not pivot from over-regulation and energy policy mistakes, the current supply situation likely will worsen. Plus, at the current benchmark pricing, now may be a good time to refill the strategic petroleum reserve, as it was lowered for political purposes to the lowest level in over 40 years, and would give a strong tailwind to pricing. Now is a good time to stay with, add to positions of or start accumulating mega-cap energy leaders for 2023, as the demand from China is likely to send these top stocks higher.

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