Since topping out at $120 a barrel back in the summer of 2022, the major oil benchmarks traded down every month until bottoming last December. The decline from the top in June of 2022 was a staggering 40%. While the oil majors can still make money at that level, with a declining price many opted to slow or halt production. By March of this year, West Texas Intermediate crude had dropped to $67.61, a bottom that stayed in place until late June when oil finally broke out.
OPEC announced recently that production levels will stay in place going forward, and Saudi Arabia extended its million-barrels-per-day production cuts through the end of the year. In addition, with Russia cutting oil exports by 300 million barrels, the perfect storm was in place for a move higher.
We screened our 24/7 Wall St. energy research universe looking for stocks that were rated Buy, come with large and dependable dividends, and had solid upside to the posted price targets. Six top stocks came up, and all make sense for growth and income investors looking to add or increase their energy holdings.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This company was long considered an industry leader when it was known as Apache, and the stock is perhaps offering one of the best entry points in the sector. APA Corp. (NYSE: APA) explores for and produces oil and gas properties. It has operations in the United States, Egypt and the United Kingdom, as well as has exploration activities offshore Suriname. It also operates gathering, processing and transmission assets in West Texas, as well as holds ownership in four Permian-to-Gulf Coast pipelines.
APA is one of the largest U.S. exploration and production companies, with 2.3 billion barrels of oil equivalent of proven reserves (63% liquids). It is an explorer, acquirer and exploiter, and a fiscally conservative company that has grown its reserves and production consistently via acquisitions and organic projects.
The company also operates gathering, compression, processing and transmission assets in West Texas, as well as holds ownership in four Permian Basin long-haul pipelines.
Shareholders receive a 2.33% dividend. Wells Fargo has set its price target for APA stock at $53. The consensus target is just $49.73.
This integrated giant is a safer way for investors looking to get positioned in the energy sector, and shares have backed up some. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide. The company operates in the following two segments.
The Upstream segment is involved in the 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 and marketing of natural gas, as well as operating a gas-to-liquids plant.
Chevron’s Downstream segment engages in refining crude oil into petroleum products; marketing crude oil, refined products and lubricants; manufacturing and marketing of renewable fuels; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses and fuel and lubricant additives. It is also involved in cash management and debt financing activities; insurance operations; real estate activities; and technology businesses.
Chevron posted strong second-quarter results and has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG). It remains one of the best ways to play energy safely.
Investors receive a 3.69% dividend. UBS has a $209 target price, and the consensus target for Chevron stock is $187.29.
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.
ConocoPhillips stock comes with a 2.00% dividend. The $141 Jefferies price target compares with a $133.82 consensus target.
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 record second-quarter profit that was more than double from a year ago and topped Wall Street estimates, as rising oil and gas output overcame a pullback in energy prices from high levels.
The dividend yield here is 3.19%. UBS’s $139 price target is higher than the consensus target of $122.86.
Over the past two years, Berkshire Hathaway has been scooping up shares of this top energy leader. 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.
Investors receive a 1.10% dividend. Occidental Petroleum stock has an $80 price target at Truist Financial.
Pioneer Natural Resources
Many Wall Street analysts love this stock as a pure crude oil play, and the company also employs a variable dividend strategy. Pioneer Natural Resources Co. (NYSE: PXD) operates as an independent oil and gas exploration and production company in the United States.
The company explores for, develops and produces oil, NGLs and natural gas. It has operations in the Midland Basin in West Texas. As of December 31, 2021, the company had proved undeveloped reserves and proved developed non-producing reserves of 130 million barrels of oil, 92 million barrels of NGLs and 462 billion cubic feet of gas, and it owned interests in 11 gas processing plants.
Its production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.
The company is a huge player in the Permian Basin and the Eagle Ford in Texas, and it owns more than 20,000 locations in the world’s second-largest oil reservoir in the Midland Basin. With a stellar balance sheet, the company is poised to remain a top player in the Permian, as it expects to deliver solid production growth going forward.
Shareholders receive a 7.05% dividend, though it may vary from quarter to quarter. The $332 target price at Piper Sandler is well above the consensus target of $260.38.
Because OPEC and the Saudis have made it painfully clear they will continue to support oil prices by cutting production, buying these mega-cap industry leaders makes a ton of sense for growth and income investors now.
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