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Last Call as Oil Heads Back to $80: Investors Are Buying 5% High-Yield Dividend Giants
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24/7 Wall St. Insights
- After a solid start to 2024, the energy sector is up less than 5%.
- Energy stocks pay some of Wall Street’s most dependable dividends.
- 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 two best dividend stocks to own today. Access two 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 (WTI) was trading in the $90 range, but since a peak of $83.57 in late April, the price for the benchmark giant has traded flat for the last five months until ripping higher recently to $77.07.
The wildcard for the black gold is the Middle East. With tensions racing higher as the Israeli Army turns its attention to 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 a year ago 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.
Following a massive bombardment of Israel from Iran, Hezbollah striking Haifa, the entire world now waits on the Israeli response, and with another Cat 5 hurricane exploding through the Gulf of Mexico towards Florida, shutting down oil platforms, the stakes are even higher.
Three high-yield energy giants are offering an incredible entry point, and all are rated Buy on Wall Street.
Why do we cover dividend stocks?
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 one of the premier European integrated oil giants, paying shareholders a hefty 5.84% divided. BP PLC (NYSE: BP) engages in the energy business worldwide.
It operates through these segments:
- Gas & Low Carbon Energy
- Oil Production & Operations
- Customers & Products
- Rosneft
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 get positioned in the energy sector and has a sweet 4.10% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries. The company operates in two segments.
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; and transportation, storage
- Marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstream segment engages in:
- Refining crude oil into petroleum products
- Marketing crude oil, refined products, and lubricants
- Manufacturing and marketing renewable fuels
- Transporting crude oil and refined 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
It also involved in cash management, debt financing, insurance operations, real estate, and technology businesses.
Chevron announced last fall that it has entered into a definitive agreement with Hess Corp. (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.
TotalEnergies
This French integrated giant is another excellent way to play the energy sector from the European side. It sports a hefty 5% dividend. TotalEnergies SE (NYSE: TTE) is an integrated oil and gas company worldwide.
The company operates through four segments:
- Exploration and production
- Integrated Gas
- Renewables and power
- Refining and chemicals and marketing and services
The company’s Exploration & Production segment involves oil and natural gas exploration and production activities in approximately 50 countries.
Its Integrated Gas, Renewables & Power segment engages in:
- 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
The TotalEnergies Refining & Chemicals segment refines petrochemicals, including olefins and aromatics, and polymer derivatives, such as polyethylene, polypropylene, polystyrene, and hydrocarbon resins. It also converts biomass and processes elastomers. This segment also trades and ships crude oil and petroleum products.
Its 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, as well as fuel payment solutions
- It also operates approximately 15,500 service stations
Goldman Sachs Sees S&P 500 at 6000 and Has 4 Buy-Rated Stocks With Yields as High as 8.25%
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