We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Dividend Stocks to Gain Despite Volatility in Energy Market
Read MoreHide Full Article
Notorious volatility is an integral part of the energy sector, as reflected in the wild swings in oil prices since the onset of the coronavirus pandemic. However, due to some key factors, dividend-paying stocks in the same space are relatively less volatile, thereby making Marathon Petroleum Corporation (MPC - Free Report) ,Valero Energy Corporation (VLO - Free Report) and Phillips 66 (PSX - Free Report) well-poised to gain.
Extremely Volatile Energy Market
We should never forget how oil prices have behaved since the beginning of the coronavirus outbreak. The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The commodity’s price plunged to a negative $36.98 per barrel on Apr 20, 2020.
However, with the rapid developments of vaccines by scientists, which led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate (WTI) crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data is per the U.S. Energy Information Administration. Although oil price is currently favorable, the commodity’s pricing environment will remain volatile.
Dividend Stocks to the Rescue
Overall oil pricing scenario seems scary, which could easily deter investors from allocating money to energy companies. Despite this volatility constraint, investors could consider dividend-paying companies belonging to the industry. This is because, generally, companies with stable dividend-paying history are usually relatively less volatile than stocks with no dividend history. It is expected that companies that have been rewarding stockholders with dividends will try their best to continue paying at the same pace or higher, making the stocks attractive and less volatile to the vagaries of the market.
We have employed our Stock Screener to zero in on three such stocks. All the stocks currently carry a Zacks Rank #2 (Buy). 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 future dividend increases.
Marathon Petroleum Corporation: As a leading, integrated, downstream energy player, Marathon Petroleum is the operator of the largest refining system in the nation. Handsome margins and throughput in all regions are aiding MPC. It pays out a quarterly dividend of 75 cents ($3.00 annualized) per share, which gives it a 2.38% yield at the current stock price. (Check Marathon Petroleum’s dividend history here).
Valero Energy Corporation: Constraint in worldwide refining capacity amid demand recovery is aiding Valero Energy. This is likely to boost the utilization of refinery capacity and, in turn, drive its bottom line. Valero Energy pays a quarterly cash dividend on the common stock of $1.02 ($4.08 annualized) per share. (Check Valero Energy’s dividend history here).
Phillips 66: Phillips 66 is a diversified energy manufacturing and logistic player with a presence in Midstream, Chemicals, Refining, and Marketing and Specialties businesses. With a strong focus on disciplined capital allocation and maintaining financial strength, the firm is well-positioned to continue rewarding shareholders with dividend growth. Phillips 66 pays a quarterly cash dividend on the common stock of $1.05 ($4.20 annualized) per share. (Check Phillips 66’s dividend history here).
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
3 Dividend Stocks to Gain Despite Volatility in Energy Market
Notorious volatility is an integral part of the energy sector, as reflected in the wild swings in oil prices since the onset of the coronavirus pandemic. However, due to some key factors, dividend-paying stocks in the same space are relatively less volatile, thereby making Marathon Petroleum Corporation (MPC - Free Report) ,Valero Energy Corporation (VLO - Free Report) and Phillips 66 (PSX - Free Report) well-poised to gain.
Extremely Volatile Energy Market
We should never forget how oil prices have behaved since the beginning of the coronavirus outbreak. The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The commodity’s price plunged to a negative $36.98 per barrel on Apr 20, 2020.
However, with the rapid developments of vaccines by scientists, which led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate (WTI) crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data is per the U.S. Energy Information Administration. Although oil price is currently favorable, the commodity’s pricing environment will remain volatile.
Dividend Stocks to the Rescue
Overall oil pricing scenario seems scary, which could easily deter investors from allocating money to energy companies. Despite this volatility constraint, investors could consider dividend-paying companies belonging to the industry. This is because, generally, companies with stable dividend-paying history are usually relatively less volatile than stocks with no dividend history. It is expected that companies that have been rewarding stockholders with dividends will try their best to continue paying at the same pace or higher, making the stocks attractive and less volatile to the vagaries of the market.
We have employed our Stock Screener to zero in on three such stocks. All the stocks currently carry a Zacks Rank #2 (Buy). 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 future dividend increases.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3 Stocks in the Spotlight
Marathon Petroleum Corporation: As a leading, integrated, downstream energy player, Marathon Petroleum is the operator of the largest refining system in the nation. Handsome margins and throughput in all regions are aiding MPC. It pays out a quarterly dividend of 75 cents ($3.00 annualized) per share, which gives it a 2.38% yield at the current stock price. (Check Marathon Petroleum’s dividend history here).
Valero Energy Corporation: Constraint in worldwide refining capacity amid demand recovery is aiding Valero Energy. This is likely to boost the utilization of refinery capacity and, in turn, drive its bottom line. Valero Energy pays a quarterly cash dividend on the common stock of $1.02 ($4.08 annualized) per share. (Check Valero Energy’s dividend history here).
Phillips 66: Phillips 66 is a diversified energy manufacturing and logistic player with a presence in Midstream, Chemicals, Refining, and Marketing and Specialties businesses. With a strong focus on disciplined capital allocation and maintaining financial strength, the firm is well-positioned to continue rewarding shareholders with dividend growth. Phillips 66 pays a quarterly cash dividend on the common stock of $1.05 ($4.20 annualized) per share. (Check Phillips 66’s dividend history here).