If any investor has stood the test of time, it is Warren Buffett. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws literally thousands of loyal fans who are investors. Known for his long buy-and-hold strategies and his massive portfolio of public and private holdings, Buffett remains one of the preeminent investors in the entire world.
[in-text-ad]
One sector that Berkshire Hathaway continues to add to is energy, specifically Occidental Petroleum Corp. (NYSE: OXY) shares. Between May 25 and May 30, Buffett purchased 4.66 million shares of the stock for about $275 million. With the newest trades factored in, Buffett now holds 222 million shares worth around $13 billion, or a massive 24.9% stake in the company.

One likely reason for Buffett’s continued purchasing is that the top energy companies are cheap and flush with cash, and they have been cutting back on exploration and production costs. In addition, oil has traded sideways for almost all of 2023, and many feel a breakout to higher levels is on the way. Buffett is not the only one bullish on oil. BofA Securities commodities head of research feels that the second half of the year will see a surge in the price of oil and should be close to $90 a barrel by the end of 2023. Goldman Sachs sees $100 per barrel by April of 2024.

We screened our 24/7 Wall St. energy research looking for high-yielding mega-cap energy leaders and found five that look like solid bets for those not chasing the AI tech trade. 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. 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.

Investors receive a 4.48% dividend. Raymond James has a $48 target price on BP stock, and the consensus target is $44.68. The closing share price on Wednesday was $33.71.

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).
[in-text-ad]
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 posted strong first-quarter results and remains one of the best ways to play energy safely.

Shareholders receive a 4.01% dividend. UBS recently started coverage with a $212 target price. Chevron stock has a consensus target of $188.12, and shares closed on Wednesday at $150.62.

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, natural gas liquids (NGL) 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 master limited partnerships.

Enterprise Products Partners stock comes with a 7.75% distribution. The $33 J.P. Morgan price target compares with a $32.22 consensus target and Wednesday’s close at $25.33.

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.

The dividend yield is 4.11%. The BofA Securities target price is $79, while the consensus target is $72.41. Shell stock closed on Wednesday at $56.00.
[in-text-ad]

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.

TotalEnergies stock investors receive a 5.06% dividend. BofA Securities has set its price target at $85. The consensus target is just $72.57, and shares closed at $56.30 on Wednesday.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

Given the shaky geopolitical state of the world, we decided to focus on the mega-cap domestic and foreign sector leaders. Needless to say, if the current administration does not pivot at some point on the overregulation and energy policy mistakes, the current supply situation likely will worsen. Now is a good time to stay with, add to positions in or start accumulating shares mega-cap energy leaders for 2023.

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