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%, and 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 had dropped to $67.61, a bottom that stayed in place until late June when oil finally broke out.
OPEC announced recently that its production levels will stay in place going forward, and Saudi Arabia has extended its million-barrel-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 are rated Buy, come with large and dependable dividends, and have solid upside to the posted price targets. Seven top companies came up, and all make sense for growth and income investors looking to add energy. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Chevron
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.
The 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.
The company sports a 3.66% dividend. Mizuho has a $215 target price on Chevron stock. The consensus target is $187.46, and the shares closed on Friday at $166.28.
Devon Energy
This may be one of the best value propositions in the sector, and it was one of the first to utilize a variable dividend strategy. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs) in the United States and Canada.
The company operates approximately 19,000 wells and also offers midstream energy services, including gathering, transmission, processing, fractionation and marketing to producers of natural gas, NGLs, crude oil and condensate through its natural gas pipelines, plants and treatment facilities.
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