After catching some decent inflation data last week, the Federal Reserve probably could have had a better start to this week than receiving the news that OPEC in a very surprising move cut oil production by an additional 1.16 million barrels per day. Saudi Arabia will lead the charge by cutting 500,000 barrels per day. Some across Wall Street feel that the production cut could lift benchmark prices by as much as $10.
The surprising OPEC move comes after oil plunged last month, back down near $70 per barrel, which was the lowest close in 15 months. Yet, virtually none of the energy analysts we cover across Wall Street felt that there would be an additional cut to go with the 1 million barrel per day cuts that were implemented late last year.
Warren Buffett took advantage of the financial contagion worries that hammered oil in early March. The famed investor added an additional 5.8 million shares of Occidental Petroleum at prices ranging between $59.85 to $61.90 a share. He bought 8 million more between March 23 and March 27. It was reported last Friday that he added an additional 3.7 million shares last week. The “Oracle of Omaha” now owns a stunning 211 million shares, which is about a 23.5% stake in the company.
Given that many of the top oil stocks were mauled during the first quarter of 2023, after being the leading sector in 2022, investors can get some great value with the mega-cap dividend-paying integrated majors. Seven stocks are rated Buy on Wall Street, and all have big and dependable dividends.
BP
This is one of the premier European integrated oil giants, and top Wall Street analysts are quite positive on the shares. BP PLC (NYSE: BP) engages in the energy business worldwide. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power 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. It is involved in refining, supply and trading of oil products, as well as operation of electric vehicle charging facilities. In addition, it produces and refines oil and gas, and it invests in upstream, downstream and alternative energy companies, as well as in advanced mobility, bio and low carbon products, carbon management, digital transformation and power and storage areas.
7 of Goldman Sachs’ Top New Q2 Ideas Also Pay Big, Dependable Dividends
The company posted record 2022 earnings, along with the biggest profit in the 114-year history of the company. In addition, management announced a 10% increase in the dividend and an extra $2.75 billion of buybacks to an already big scheduled program.
Shareholders receive a 3.81% yield with the coming increase. Bernstein has a $53 target price on BP stock, much higher than the $44.32 consensus target. Monday’s closing share price of $39.74 was up close to 5% on the day.
Chevron
This energy giant is a solid play for investors who are more conservative and looking to be positioned in the sector. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company with worldwide operations in exploration and production, refining and marketing, transportation, and petrochemicals. The company sports a sizable dividend and has a solid place in natural gas and liquefied natural gas (LNG).
With the strongest financial base of the majors, coupled with an attractive relative asset base, many on Wall Street feel that Chevron offers the most straightforwardly positive risk/reward. Although current conditions do not warrant a large focus on production growth, Chevron possesses numerous medium-term drivers that should support production levels in the coming years.
Chevron reported full-year 2022 earnings of $35.5 billion, well above the $15.6 billion in 2021, and increased its dividend by 6%. This increase puts Chevron on track to make 2023 the 35th consecutive year with an increase in annual dividend payout per share.
Investors receive a 3.70% dividend, when the increase is factored in. The $212 Raymond James price target is a Wall Street high. Chevron stock has a consensus target of $191.59, and shares ended Monday trading at $169.95.
ConocoPhillips
This is another large-cap company that offers strong value for investors. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, natural gas liquids (NGLs) and LNG worldwide.
The company portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects.
Many Wall Street analysts feel Conoco can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford with visibility on future growth from a sizable position in the Permian Basin.
The company posted revenues that beat estimates, while earnings fell slightly behind the consensus forecast.
ConocoPhillips stock comes with a 2.40% dividend. The Truist Financial price target is $151, while the consensus target of $131.56. Monday’s close at $108.42 was up over 9% for the day.
Exxon Mobil
This mega-cap energy leader trades at a reasonable valuation and still offers investors an excellent entry point. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
Top Wall Street analysts expect Exxon to remain a key beneficiary in this higher oil price environment, and most remain strongly positive about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to a further demand recovery, with Exxon Mobil offering greater downstream/chemicals exposure relative to peers.
The top U.S. oil producer reported fourth-quarter 2022 earnings of $12.8 billion, or $3.09 per share, as well as full-year earnings of $55.7 billion, or $13.26 per share.
The dividend yield here is 3.32%. Mizuho’s $147 price target is well above the $127.21 consensus target. Exxon Mobil stock closed at $116.13 on Monday, a one-day gain of almost 6%.
Occidental Petroleum
Over the past year, Berkshire Hathaway has been scooping up shares of this company. Occidental Petroleum Corp. (NYSE: OXY) engages in the acquisition, exploration and development of oil and gas properties in the United States, the Middle East, Africa and Latin America.
The company’s Oil and Gas segment explores for, develops, and produces oil and condensate, NGLs and natural gas. The Midstream and Marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide and power. This segment also trades around its assets, consisting of transportation and storage capacity, and it invests in entities.
The Chemical segment manufactures and markets basic chemicals, including chlorine, caustic soda, chlorinated organics, potassium chemicals, ethylene dichloride, chlorinated isocyanurates, sodium silicates and calcium chloride, as well as vinyls, comprising vinyl chloride monomer, polyvinyl chloride and ethylene.
Occidental Petroleum stock investors receive a 1.15% dividend. The $75 Raymond James price target accompanies a Strong Buy rating. The $71.44 consensus also compares with Monday’s close at $65.18.
Shell
This European energy giant offers investors size and strength. Shell PLC (NYSE: SHEL) operates as an energy and petrochemical company in Europe, Asia, Africa, the Americas and elsewhere.
Shell explores for and extracts crude oil, natural gas and NGLs. It markets and transports oil and gas, produces gas-to-liquids fuels and other products, and operates upstream and midstream infrastructure necessary to deliver gas to market. The company also markets and trades natural gas, LNG, crude oil, electricity and carbon-emission rights, and it markets and sells LNG as a fuel for heavy-duty vehicles and marine vessels.
In addition, the company trades in and refines crude oil and other feed stocks, such low-carbon fuels, lubricants, bitumen, sulfur, gasoline, diesel, heating oil, aviation fuel and marine fuel. It produces and sells petrochemicals for industrial use, and it manages oil sands activities. Further, the company produces base chemicals, comprising ethylene, propylene and aromatics, as well as intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide and ethylene glycol.
Furthermore, Shell generates electricity through wind and solar resources, produces and sells hydrogen and provides electric vehicle charging services, as well as electricity storage.
Shell delivered a record $40 billion profit in 2022. It also posted a record fourth-quarter profit of $9.8 billion, after a strong recovery in earnings from LNG trading, beating analyst forecasts for an $8.0 billion profit. The company also increased its dividend by a strong 15%.
Shareholders receive a 4.15% dividend with the increase. Shell stock has a $74 target price at BofA Securities, and the consensus target is $71.38. Monday’s close at $60.51 was up over 5% on the day.
24/7 Wall St.Goldman Sachs Has 6 Buy-Rated Dividend-Paying Regional Banks With Huge Upside Potential
TotalEnergies
This French integrated giant is another great way to play an energy rally from the European side. TotalEnergies S.E. (NYSE: TTE) operates as an integrated oil and gas company worldwide. Its Exploration & Production segment engages in oil and natural gas exploration and production activities in approximately 50 countries.
The Integrated Gas, Renewables & Power segment engages in the 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 Refining & Chemicals segment refines petrochemicals, including olefins and aromatics; and polymer derivatives, such as polyethylene, polypropylene, polystyrene and hydrocarbon resins, as well as biomass conversion and elastomer processing. This segment also engages in trading and shipping crude oil and petroleum products.
The 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 provides fuel payment solutions. It operates approximately 15,500 service stations.
Though finding comprehensive final earnings for the quarter proved to be difficult, the company still pays the highest dividend of all of the mega-cap integrated leaders.
Investors receive a 5.04% dividend. The BofA Securities price target is $84. The consensus target was last seen at $73.72. On Monday, TotalEnergies stock closed almost 7% higher to $63.14.
Given the shaky geopolitical state of the world, we decided to focus on the mega-cap domestic and foreign sector leaders, as now is a good time to stay with, add to positions or to start accumulating them for 2023. While all were up big Monday, they are offering good entry levels. It may make sense to buy partial postions now and see how earnings for the first quarter come in.
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
