Investing

If Israel Targets Iran's Oil, Prices Will Explode - Buy These 4 Dividend Energy Giants Now

Lee Jackson

Published: October 2, 2024 2:46 pm

24/7 Wall St/ Insights:

• Tensions in the Middle East are the highest in decades
• Oil is trading at the lowest level since last December
• Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “7 Things I Demand in a Dividend Stock”, plus get our 2 best dividend stocks to own today. Access 2 legendary, high-yield dividend stocks Wall Street loves

Investors love dividend stocks because they provide dependable income, passive income streams, and an excellent opportunity for solid total return. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or portfolio consists of income and stock appreciation.

This time, a year ago, West Texas Intermediate was trading in the $90 range, but since a 2024 peak of $83.57 in late April, the price for the benchmark giant has traded flat to down for the last five months, closing recently at $71.88 after dropping to the $65 range in early September.

The wildcard for the black gold is the Middle East. With tensions ripping higher as the Israeli Army turns its attention to a ground assault against Hezbollah in Lebanon, the fears for a widening conflict in an area that is always a tinderbox are growing. While Hamas has taken a beating in Gaza since the massacre on October 7th of 2023, Hezbollah operates farther away and recently launched dozens of missiles at an Israeli military base after strikes against the terrorist group by Israel.

In response to Israel’s elimination of many of the top Hamas and Hezbollah leaders recently, one being killed while in Tehran, Iran unloaded an estimated 180 ballistic missiles at Israel, which once again ratcheted up the tension in the region.

For investors, the timing could be perfect for grabbing some of the high-yield dividend giants that have treaded water this year while AI-related tech stocks have soared higher. We screened our 24/7 Wall St. energy research database and found three companies offering big, dependable dividends and the potential for serious upside. All are rated Buy at top Wall Street firms.

Why do we cover Energy dividend stocks?

Energy dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

BP

This company is a premier European integrated oil giant, paying shareholders a huge 5.98 % divided. BP p.l.c. (NYSE: BP) engages in the energy business worldwide.

It operates through:

• Gas & Low Carbon Energy
• Oil Production & Operations
• Customers & Products
• Rosneft segments

BP produces and trades natural gas, offers biofuels, operates onshore and offshore wind 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; refining, supply, and trading of oil products; and operation of electric vehicle charging facilities.

In addition, it produces and refines oil and gas and invests in upstream, downstream, and alternative energy companies, advanced mobility, bio and low-carbon products, carbon management, digital transformation, and power and storage areas.

Chevron

This integrated giant is a safer way for investors looking to position themselves in the energy sector. It pays a rich 4.65% dividend. Chevron Corporation (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.

The company operates in two segments:

• Upstream
• Downstream

The Upstream segment is involved in the following:

• Exploration, development, production, and transportation of crude oil and natural gas
• Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
• Transportation of crude oil through pipelines
• Transportation, storage, and marketing of natural gas, as well as operating a gas-to-liquids plant

The Downstream segment engages in:

• Refining crude oil into petroleum product
• Marketing crude oil, refined products, and lubricants
• Manufacturing and marketing renewable fuels
• Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
• Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives

Chevron announced a year ago that it has entered into a definitive agreement with Hess Corporation (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.

Three lawsuits have been filed against Hess, charging inadequate disclosure over the sale, and Chevron has said arbitration over Hess’ Guyana assets could delay the closing timeline until October 2025. However, most Wall Street analysts feel the deal will ultimately be completed, and Chevron will emerge even more powerful in the energy sector.

ConocoPhillips

This is another large-cap company that offers substantial value for investors and a solid 2.85% dividend. ConocoPhillips (NYSE: COP) explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide.

Conoco’s portfolio are:

• 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.

In May, ConocoPhillips and Marathon Oil Corporation (NYSE: MRO) announced that they had entered into a definitive agreement pursuant to which ConocoPhillips will acquire Marathon Oil in an all-stock transaction with an enterprise value of $22.5 billion, inclusive of $5.4 billion of net debt.

Under the terms of the agreement, Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock, representing a 14.7% premium to the closing share price of Marathon Oil on May 28, 2024, and a 16.0% premium to the prior 10-day volume-weighted average price.

Exxon Mobil

The slow decline in oil prices offers investors an excellent entry point, and they will gladly grab a strong 3.20% dividend. Exxon Mobil Corporation (NYSE: XOM) is the world’s largest international integrated oil and gas company, exploring for and producing crude oil and natural gas in:

• The United States
• Canada
• South America
• Europe
• Africa
• Asia
• Australia/Oceania

Exxon Mobil also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and transports and sells crude oil, natural gas, and petroleum products.

Top Wall Street analysts expect ExxonMobil to remain a key beneficiary in a higher oil price environment, and most remain very optimistic about the company’s sharp positive inflection in capital allocation strategy, Upstream portfolio, and leverage to further demand recovery.

ExxonMobil also offers greater Downstream/Chemicals exposure than its peers.