Investing

World War 3 May Be Back On - Grab These Strong Buy High-Yield Integrated Oil Giants Now

Lee Jackson

Published: November 23, 2024 8:09 am

Key Points

• Except for a spike in October, oil has traded sideways since the summer
• The mega-cap exploration and production legacy giants are cheap and pay reliable dividends
• Should energy be a part of a well-rounded portfolio? Asking a qualified financial advisor can help determine if you should own some of the top stocks now. Click here to get started finding one. 

Over the years, the energy trade has often been considered an old-school relic. Still, as we found out last winter, the much-hyped electric vehicle revolution has yet to arrive and likely will never dominate the industry. Current spot pricing for black gold has fallen back to the lowest level in almost a year, and it was reported that Hedge Funds, while still long the benchmarks, are shorting gasoline and distillate futures. This is all in addition to OPEC’s decision to keep their production cuts in place until the end of the year.

This shake-out of oil pricing has occurred despite war breaking out in the Middle East after the devastating Hamas attack on Israel last October. Now that the war has expanded, there are worries that Iran could become more involved as Israel turns its attention to eliminating Hezbollah and finishing off Hamas. Now, with Iran and Israel exchanging barrages of rockets and drones, there is an even greater chance that the region could explode. If oil supplies are threatened in the region, prices could return to the year’s highs in the mid-$80s or higher.

Toss in the fact that Ukraine is now launching U.S.-made long-range missiles into Russia, and they are returning the favor, the possibility for that almost three-year war to expand also seems likely.

Four integrated mega-cap exploration and production stocks are on sale. All four pay healthy high-yield dividends. They are all rated Buy at top Wall Street firms that we cover here at 24/7 Wall St.

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 and achieve financial independence.

BP

This company is a premier European integrated oil giant, paying shareholders a hefty 6.5% 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 option for investors looking to position themselves in the energy sector. It has a sweet 4.03% 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 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 involves cash management, debt financing, insurance operations, real estate, and technology businesses.

Chevron Corporation announced last fall 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.

Exxon Mobil

The slow but stable move in oil prices still offers investors an excellent entry point for this industry behemoth, and they will gladly grab a strong 3.25% 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 flat to higher oil price environment. Most remain very optimistic about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to further demand recovery. In addition, ExxonMobil offers greater Downstream/Chemicals exposure than its peers.

Exxon Mobil has completed its purchase of oil shale giant Pioneer Natural Resources Company in a $59.5 billion all-stock purchase. The deal created the largest U.S. oil field producer and guaranteed a decade of low-cost production.

Total Energies

This French-integrated giant is another excellent way to play the energy sector from the European side. It sports a hefty 5.70% 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; and fuel payment solutions
• It also operates approximately 15,500 service stations