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3 Dividend Stocks to Gain in '24 Despite Energy Market Volatility
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Since the onset of the coronavirus pandemic, the market has witnessed wild swings in oil prices. This reflects that notorious volatility is an integral part of the energy sector. However, due to some key factors, dividend-paying stocks in the same space are relatively less volatile, thereby poising EOG Resources, Inc. (EOG - Free Report) , Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) for growth in the next year.
Extremely Volatile Energy Market
We should not forget how oil prices 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 development of vaccines by scientists, which in turn 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 are per the U.S. Energy Information Administration (“EIA”).
In its recently published short-term energy outlook, EIA anticipates a WTI oil price of $78.07 per barrel in 2024, slightly surpassing its projected figure of $77.63 for the current year. Contributing to the strength of commodity prices are additional voluntary production cuts implemented by several OPEC countries.
Dividend Stocks to the Rescue
The drastic fluctuation of oil prices, plummeting into negative territory during the pandemic and now projected to surpass $75 per barrel next year, may discourage investors from allocating funds to energy companies.
Despite this volatility constraint, investors may 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 next year too, 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 carry a Zacks Rank #3 (Hold). 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.
3 Stocks to Keep an Eye On
EOG Resources: In the United States, EOG Resources is a leading exploration and production player. Since transitioning to premium drilling, EOG boasted that it has returned billions in cash to shareholders. The firm has hiked the quarterly dividend on the common stock by 10% to 91 cents per share ($3.64 annualized), payable on Jan 31, 2024, to shareholders of record as of Jan 17, 2024. EOG will also pay a special dividend of $1.50 per share on Dec 29 to stockholders of record as of Dec 15. Notably, the company is committed to raising its annual regular dividend at a compound annual growth rate of 21% from 1999 through 2024. (Check EOG Resources’ dividend history here).
ExxonMobil: It is among the largest integrated energy companies in the world and has consistently raised its annual dividend at an average annual growth rate of 5.8% over the past 41 years. The energy major can rely on its strong balance sheet to withstand any business turmoil and hence can support future dividend payments. (Check ExxonMobil’s dividend history here).
Chevron: It is also a leading integrated energy company and has a solid balance sheet to support its future dividend increases. The company has increased its annual dividend for 36 successive years and is expecting a dividend increase in the fourth quarter. (Check Chevron’s dividend history here).
Image: Bigstock
3 Dividend Stocks to Gain in '24 Despite Energy Market Volatility
Since the onset of the coronavirus pandemic, the market has witnessed wild swings in oil prices. This reflects that notorious volatility is an integral part of the energy sector. However, due to some key factors, dividend-paying stocks in the same space are relatively less volatile, thereby poising EOG Resources, Inc. (EOG - Free Report) , Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) for growth in the next year.
Extremely Volatile Energy Market
We should not forget how oil prices 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 development of vaccines by scientists, which in turn 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 are per the U.S. Energy Information Administration (“EIA”).
In its recently published short-term energy outlook, EIA anticipates a WTI oil price of $78.07 per barrel in 2024, slightly surpassing its projected figure of $77.63 for the current year. Contributing to the strength of commodity prices are additional voluntary production cuts implemented by several OPEC countries.
Dividend Stocks to the Rescue
The drastic fluctuation of oil prices, plummeting into negative territory during the pandemic and now projected to surpass $75 per barrel next year, may discourage investors from allocating funds to energy companies.
Despite this volatility constraint, investors may 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 next year too, 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 carry a Zacks Rank #3 (Hold). 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.
3 Stocks to Keep an Eye On
EOG Resources: In the United States, EOG Resources is a leading exploration and production player. Since transitioning to premium drilling, EOG boasted that it has returned billions in cash to shareholders. The firm has hiked the quarterly dividend on the common stock by 10% to 91 cents per share ($3.64 annualized), payable on Jan 31, 2024, to shareholders of record as of Jan 17, 2024. EOG will also pay a special dividend of $1.50 per share on Dec 29 to stockholders of record as of Dec 15. Notably, the company is committed to raising its annual regular dividend at a compound annual growth rate of 21% from 1999 through 2024. (Check EOG Resources’ dividend history here).
EOG Resources, Inc. Dividend Yield (TTM)
EOG Resources, Inc. dividend-yield-ttm | EOG Resources, Inc. Quote
ExxonMobil: It is among the largest integrated energy companies in the world and has consistently raised its annual dividend at an average annual growth rate of 5.8% over the past 41 years. The energy major can rely on its strong balance sheet to withstand any business turmoil and hence can support future dividend payments. (Check ExxonMobil’s dividend history here).
Exxon Mobil Corporation Dividend Yield (TTM)
Exxon Mobil Corporation dividend-yield-ttm | Exxon Mobil Corporation Quote
Chevron: It is also a leading integrated energy company and has a solid balance sheet to support its future dividend increases. The company has increased its annual dividend for 36 successive years and is expecting a dividend increase in the fourth quarter. (Check Chevron’s dividend history here).
Chevron Corporation Dividend Yield (TTM)
Chevron Corporation dividend-yield-ttm | Chevron Corporation Quote