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3 Dividend Stocks to Gain Amid Energy Sector Volatility
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The coronavirus pandemic has caused volatility in oil and gas prices, making it harder for energy companies to stabilize their operations. Oil markets had been in turmoil and producers throughout the world encountered innumerable challenges.
Being one of the world’s most economically mature commodity markets, the price of crude oil has a significant influence on the global economy. Notably, uncertainties heightened in the initial months of the pandemic. On Apr 20, 2020, crude oil’s price plunged to a negative $36.98 per barrel.
However, two years after the pandemic-driven epic oil price crash, optimism is back in the sector, with the commodity rallying around $85-a-barrel to multi-year highs. Amid the possibility of magnified gains and losses, investing in high-quality dividend stocks like Chevron Corporation (CVX - Free Report) , Exxon Mobil Corporation (XOM - Free Report) and Diamondback Energy, Inc. (FANG - Free Report) might fetch you stable, promising returns.
Why You Should Consider Investing in Dividend Stocks
Investing in dividend stocks can be a great approach for investors as these provide steady income and cushion against market risks. Dividend growers have consistently outperformed non-dividend payers with less volatility. They not only offer a higher income but also protect against equity market risks.
Dividend stocks are safe bets to create wealth, as the payouts generally act as a hedge against economic uncertainty and simultaneously provide downside protection by offering sizable yields on a regular basis. Dividend growth can also help investors to offset some of the value destruction of the high inflationary environment prevailing at the moment.
The overall oil pricing scenario seems unpredictable, which could easily deter an investor from allocating money to energy companies. Despite the volatility, investors can consider dividend-paying companies belonging to the industry. The companies, which have been rewarding stockholders with dividends, are expected to try to continue paying at the same pace or higher, making the stocks attractive and less susceptible to market turmoils.
We have employed our Stock Screener to zero down on three such stocks. With a dividend yield of more than 2%, all the companies have raised dividends over the past five years. Moreover, with a payout ratio of less than 60%, the companies ensure sustainability, with enough scope for dividend increases.
Our Choices
We have used the above-mentioned criteria to narrow down three dividend-paying energy stocks.
Chevron: Chevron is one of the largest publicly traded oil and gas companies in the world, which participates in every aspect related to energy, from oil production to refining and marketing. CVX’s dividend of $1.42 per share ($5.68 annualized) represents a 3.54% yield. (Check Chevron’s dividend history here)
Headquartered in San Ramon, CA, Chevron is valued at $320.8 billion. The 2022 Zacks Consensus Estimate for CVX indicates 126.3% year-over-year earnings per share growth. The Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 7.5%, on average. CVX shares have gained 66% in the past year.
ExxonMobil: As a leading integrated energy player, ExxonMobil holds a pipeline of key projects in the Permian, the most prolific basin in the United States. Like upstream businesses, XOM benefits from its strong refinery utilization. The Zacks Ranked #2 company pays out a quarterly dividend of 88 cents ($3.52 annualized) per share, which gives it a 3.7% yield at the current stock price. (Check ExxonMobil’s dividend history here).
ExxonMobil is valued at $407.1 billion.XOM has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The integrated energy player has a trailing four-quarter earnings surprise of 1.6%, on average. XOM shares have gained 71.9% in a year.
Diamondback: Diamondback is an independent exploration and production company, which primarily focuses on the Permian Basin. FANG pays out a quarterly dividend of $3.05 ($3 annualized) per share, which gives it a 9.5% yield at the current stock price. (Check Diamondback’s dividend history here).
Diamondback is valued at $24.3 billion. The Zacks Rank #3 (Hold) company’s board approved a $2-billion increase in its share repurchase authorization, augmenting total authorized common stock repurchases to $4 billion. Diamondback has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days. FANG shares have gained 63% in a year.
Image: Bigstock
3 Dividend Stocks to Gain Amid Energy Sector Volatility
The coronavirus pandemic has caused volatility in oil and gas prices, making it harder for energy companies to stabilize their operations. Oil markets had been in turmoil and producers throughout the world encountered innumerable challenges.
Being one of the world’s most economically mature commodity markets, the price of crude oil has a significant influence on the global economy. Notably, uncertainties heightened in the initial months of the pandemic. On Apr 20, 2020, crude oil’s price plunged to a negative $36.98 per barrel.
However, two years after the pandemic-driven epic oil price crash, optimism is back in the sector, with the commodity rallying around $85-a-barrel to multi-year highs. Amid the possibility of magnified gains and losses, investing in high-quality dividend stocks like Chevron Corporation (CVX - Free Report) , Exxon Mobil Corporation (XOM - Free Report) and Diamondback Energy, Inc. (FANG - Free Report) might fetch you stable, promising returns.
Why You Should Consider Investing in Dividend Stocks
Investing in dividend stocks can be a great approach for investors as these provide steady income and cushion against market risks. Dividend growers have consistently outperformed non-dividend payers with less volatility. They not only offer a higher income but also protect against equity market risks.
Dividend stocks are safe bets to create wealth, as the payouts generally act as a hedge against economic uncertainty and simultaneously provide downside protection by offering sizable yields on a regular basis. Dividend growth can also help investors to offset some of the value destruction of the high inflationary environment prevailing at the moment.
The overall oil pricing scenario seems unpredictable, which could easily deter an investor from allocating money to energy companies. Despite the volatility, investors can consider dividend-paying companies belonging to the industry. The companies, which have been rewarding stockholders with dividends, are expected to try to continue paying at the same pace or higher, making the stocks attractive and less susceptible to market turmoils.
We have employed our Stock Screener to zero down on three such stocks. With a dividend yield of more than 2%, all the companies have raised dividends over the past five years. Moreover, with a payout ratio of less than 60%, the companies ensure sustainability, with enough scope for dividend increases.
Our Choices
We have used the above-mentioned criteria to narrow down three dividend-paying energy stocks.
Chevron: Chevron is one of the largest publicly traded oil and gas companies in the world, which participates in every aspect related to energy, from oil production to refining and marketing. CVX’s dividend of $1.42 per share ($5.68 annualized) represents a 3.54% yield. (Check Chevron’s dividend history here)
Headquartered in San Ramon, CA, Chevron is valued at $320.8 billion. The 2022 Zacks Consensus Estimate for CVX indicates 126.3% year-over-year earnings per share growth. The Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 7.5%, on average. CVX shares have gained 66% in the past year.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chevron Corporation Dividend Yield (TTM)
Chevron Corporation dividend-yield-ttm | Chevron Corporation Quote
ExxonMobil: As a leading integrated energy player, ExxonMobil holds a pipeline of key projects in the Permian, the most prolific basin in the United States. Like upstream businesses, XOM benefits from its strong refinery utilization. The Zacks Ranked #2 company pays out a quarterly dividend of 88 cents ($3.52 annualized) per share, which gives it a 3.7% yield at the current stock price. (Check ExxonMobil’s dividend history here).
ExxonMobil is valued at $407.1 billion.XOM has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The integrated energy player has a trailing four-quarter earnings surprise of 1.6%, on average. XOM shares have gained 71.9% in a year.
Exxon Mobil Corporation Dividend Yield (TTM)
Exxon Mobil Corporation dividend-yield-ttm | Exxon Mobil Corporation Quote
Diamondback: Diamondback is an independent exploration and production company, which primarily focuses on the Permian Basin. FANG pays out a quarterly dividend of $3.05 ($3 annualized) per share, which gives it a 9.5% yield at the current stock price. (Check Diamondback’s dividend history here).
Diamondback is valued at $24.3 billion. The Zacks Rank #3 (Hold) company’s board approved a $2-billion increase in its share repurchase authorization, augmenting total authorized common stock repurchases to $4 billion. Diamondback has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days. FANG shares have gained 63% in a year.
Diamondback Energy, Inc. Dividend Yield (TTM)
Diamondback Energy, Inc. dividend-yield-ttm | Diamondback Energy, Inc. Quote