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World War 3 on Hold for Now: Grab 5 Ultra-High-Yield Dividend Energy Giants Fast

Lee Jackson

Published: November 1, 2024 4:46 pm

24/7 Wall St. Insights

• Spot oil dropped almost 7% after Israel did not target Iranian oil.
• With rates likely headed lower, high-yield dividend stocks are in demand.
• 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) crude was trading in the $90 per barrel range, but since a peak of $83.57 in late April, the price for the benchmark giant has traded flat for the past five months, until ripping higher to $77.07 in early October. The black gold had pushed higher after Iran dropped approximately 200 ballistic missiles on Israel, citing the deaths of Hamas and Hezbollah leaders among many reasons for the attack.

When Israel responded recently, it avoided the Iranian energy infrastructure and nuclear sites, something that immediately led traders to sell the benchmark contracts for Brent and West Texas Intermediate, resulting in a quick 15% decline from the early October highs and a 7% drop from where oil was trading a few days before the retaliation.

Investors must be aware that a much wider conflict is still very possible. The tit-for-tat drone and ballistic missile attacks could be a prelude to a much bigger war that spreads across the Middle East. In the meantime, we suggest investors grab some of the highest-yielding energy and master limited partnership (MLP) stocks. We found three that are rated Buy and offer some hefty and reliable dividends.

Why do we cover energy dividend stocks?

Dividend energy 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 hefty 6.10% divided. BP PLC (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.

Energy Transfer

This top MLP is a safe way for investors looking for energy exposure and income, as the company pays a massive 7.78% distribution. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all of the major domestic production basins.

The company is a publicly traded limited partnership with core operations that include:

• Complementary natural gas midstream
• Intrastate and interstate transportation and storage assets
• Crude oil, natural gas liquids (NGL), and refined product transportation and terminalling assets
• NGL fractionation and various acquisition and marketing assets

Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in all significant U.S.-producing regions and markets across 41 states, further solidifying its leadership position in the midstream sector.

Through its ownership of Energy Transfer Operating, the company also owns Lake Charles LNG, the general partner interests, the incentive distribution rights, and 28.5 million standard units of Sunoco L.P. (NYSE: SUN), and the public partner interests and 39.7 million standard units of USA Compression Partners L.P. (NYSE: USAC).

Mach Natural Resources

This 2023 IPO is trading below the initial offering price. Mach Natural Resources L.P. (NYSE: MNR) recently conducted a secondary offering to purchase more producing assets and will pay an estimated 13% dividend.

Mach Natural Resources is an independent upstream oil and gas company focused on acquiring, developing, and producing oil, natural gas, and natural gas liquids reserves in the Anadarko Basin region of Western Oklahoma, southern Kansas, and the Texas panhandle.

The analysts at Raymond James noted that Mach is led by Tom Ward, Co-Founder of Chesapeake Energy. Mach is another entrant into the E&P MLP space. It is a pure-play operator in the Anadarko Basin, leveraging its strong position (1 million net acres) to become the primary consolidator in the region.

Mach’s midstream position and lower base decline (~20%) allow the company to target a lower reinvestment rate (~30%) relative to the overall industry. In addition, it is one of the only exploration and production companies organized as a limited partnership as it is an oil and gas producer.

MPLX

This company is one of the top holdings in the Alerian MLP energy exchange-traded fund and pays a healthy 7.75% dividend. MPLX LP. (NYSE: MPLX) is primarily engaged in transporting crude oil and refined products and terminating in the U.S. Midwest and Gulf Coast regions and natural gas gathering and processing in the northeast from its prior acquisition of MarkWest Energy in 2015. Independent U.S. refiner Marathon Petroleum Corp. (NYSE: MPC) formed MPLX.

The company’s assets include:

• Network of crude oil and refined product pipelines
• Inland marine business
• Light-product terminals
• Storage caverns
• Refinery tanks
• Docks
• Loading racks and associated piping
• Crude and light-product marine terminals

MPLX also owns:

• Crude oil and natural gas gathering systems
• Pipelines, natural gas, and NGL processing and fractionation facilities in key U.S. supply basins

USA Compression Partners

While perhaps less known than its peers, this top company pays shareholders a hefty 9.51% dividend. USA Compression Partners L.P. (NYSE: USAC) provides natural gas compression services.

The company offers compression services to:

• Oil companies and independent producers
• Processors
• Gatherers
• Transporters of natural gas and crude oil, as well as operating stations

USA Compression Partners primarily provides natural gas compression services to infrastructure applications, including centralized natural gas gathering systems, processing facilities, and gas lift applications for crude oil wells.

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