Lock in those stable returns over 5% before they disappear – The Madison Leader Gazette

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Oil Flirts With 3-Year Highs: Lock In These Stable Yields Over 5% Before They Die

A rebound in oil prices – and oil stocks – presents an unexpected opportunity for investors to collect healthy dividend checks as fundamentals continue to improve.

Oil prices rose for a third straight week on Friday, near their three-year highs, amid rising demand for fuel and tight supplies from hurricanes in the Gulf of Mexico.

Despite the rebound, some large dividend-paying energy stocks continue to offer returns above 5%.

It might be worth fixing them now before oil prices really take off – maybe with some of your spare currency.

ExxonMobil (XOM)

Tdorante10 / Wikimedia Commons

As many large energy companies gradually shift to renewables, Exxon has moved into oil and gas, providing investors with a relatively pure way to get into space.

While Exxon isn’t likely to win favor with socially and environmentally conscious investors anytime soon, there’s a good chance that management’s commitment to fossil fuels will turn out to be the least risky approach for shareholders.

In the last quarter, for example, Exxon made $ 4.7 billion in profit on sales of $ 67.7 billion thanks to a significant recovery in demand. More importantly, the company generated $ 9.7 billion in operating cash flow, easily funding several of the management’s shareholder-friendly actions.

“We are realizing significant benefits through an improved cost structure, strong operating performance and low cost of sourcing investments which together generate attractive returns and strong cash flow to fund our investment program. , pay the dividend and reduce the debt, ”said Chief Executive Officer Darren Woods.

With the stock still down 11% from its 52-week highs and offering a particularly high dividend yield of 6.0%, it might be time to capitalize on this operating momentum with some extra cash.

Chevron (CVX)

Chevron gas station

Ben PL / Wikimedia Commons

Chevron is another leveraged oil monster that income investors might want to consider.

Although the company has not invested much capital in renewable energy sources, Chevron’s strong position in the attractive Permian basin and the impressive generation of free cash flow should give investors many reasons to ‘be optimistic.

In the last quarter, Chevron made $ 3.1 billion in profit on $ 36 billion in revenue. Meanwhile, free cash flow hit a multi-year high of $ 5.2 billion.

Management cited improved market conditions and merger synergies for the good results.

“Our free cash flow was the highest in two years thanks to strong operational and financial performance and lower capital spending,” said Chief Executive Officer Mike Wirth. “We will resume share buybacks in the third quarter at an expected rate of $ 2-3 billion per year.”

Chevron shares are also down 11% from their 52-week highs and are currently offering a 5.3% dividend yield, giving investors the value of the dividend to think about.

True, Chevron is trading at over $ 100 per share. But you can get a piece of Chevron using a popular stock trading app that lets you buy fractional stocks with as much money as you are willing to spend.

TA (PA)

BP gas station

Dirtyharry667 / Wikimedia Commons

For investors looking for a bit more progressive energy value, BP could be the answer.

Management’s plans to cut hydrocarbon production by 25% by 2025 and 40% by 2030 are by far the most aggressive transition to renewables among major oil companies. This could put BP in a stronger competitive position than its industry peers over time.

And the best part? BP’s rapid abandonment of oil investments does not appear to have too negative an impact on its short-term results.

In the last quarter, the company earned $ 2.8 billion while generating $ 5.4 billion in operating cash flow. BP even increased the dividend by 4% while starting a $ 1.4 billion share buyback with a first half cash surplus.

“We have taken a year to implement bp’s strategy to become an integrated energy company and we are progressing well, delivering another quarter of strong performance while investing for the future in a disciplined manner,” said CEO Bernard Looney.

BP stocks are down 8% from their 52 week highs and offer a dividend yield of 5.0%.

How to buy those big oil stocks

Close up on hands holding cellphone and stacking change

natakorenikha16 / Twenty20

You don’t have to be an oil mogul to start investing in these great energy stocks.

If you are working on a low budget, you can use an investment app that lets you buy “slices” of stocks for big oil companies, especially an app with no fees or commissions.

And if you’re still hesitant to get started, some investing apps will even give you a free share of Exxon, Chevron, or BP just for signing up.

Another low budget option is to use an app that lets you invest with just your “spare change”.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.


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