The double-digit summer rally has been a pleasant surprise for beleaguered investors, who suffered through the worst first half of the year since 1970. That year the market dropped 21%, versus this year’s 20.6% tumble. Some very premature optimism on inflation last week pushed stocks higher, even though inflation levels are 6.5% above the Federal Reserve’s target. One reason that inflation came in lower last week was the decline in energy prices, which have traded lower again this week.
Both Brent and West Texas Intermediate crude were hammered after Saudi Aramco said it could raise production capacity to 12 million barrels per day, a massive 3 million per-day increase, if the government asked them to. Yet, if the company does that, OPEC likely will cut production to balance that off.
In the meantime, the decline in prices is putting the top energy dividend stocks back on sale. Investors wanting to initiate or add positions have a chance to buy some of the top names in the sector at prices that are the lowest this summer.
We found seven such companies, some of them energy master limited partnerships (MLPs), that make sense for investors now. Though all these stocks are rated Buy, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
BP
This is one of the premier European integrated oil giants, and Goldman Sachs 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.
Shareholders receive a 4.34% yield. The Goldman Sachs price target for the domestic shares of BP stock is $45. The $36.85 consensus target is closer to Tuesday’s close at $30.93 per share.
Chevron
This integrated giant is a safer way for investors looking to get positioned in the energy sector. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide.
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