Advertisement
investing

Dividend Investors, Don't Give Up on Energy Stocks

Attractive yields make many of the shares we recommended appealing enough until oil prices rebound.

A few months ago, energy stocks seemed poised to revive. Yet oil prices have continued to slide, taking a toll on the seven stocks we featured in How to Profit From the Oil Crash.

Only one of our choices, pipeline operator Spectra Energy Partners (symbol SEP, $45), posted a gain through February 5, returning 7%. The other picks lost an average of 12%. ExxonMobil (XOM, $80) held up well, sliding just 2%. The biggest loser: refiner Valero Energy (VLO, $57), off 20%.

Advertisement - Article continues below

Should you dump the stocks? We think not. Oil prices are likely to stabilize and gradually recover. Energy companies are scaling back on plans to explore for more oil, which should curtail future production. Supply growth may also taper off if major producing nations, such as Russia and Saudi Arabia, can hammer out a deal to trim output.

Until oil prices rebound, several of the stocks we recommended still hold appeal for their dividends. Exxon reported a $2.8 billion profit in the fourth quarter of 2015 and looks financially solid enough to sustain its quarterly payment of 73 cents. Despite losing $588 million in the fourth quarter, Chevron (CVX, $83) says it has no plans to cut its quarterly dividend of $1.07 per share. The firm should be able to maintain payouts if oil prices edge up a bit, says Credit Suisse, and, in any case, it can tap cash on its balance sheet and sell assets to raise money. Occidental Petroleum (OXY, $65) reported a $129 million loss in the fourth quarter but said its quarterly dividend of 75 cents per share was secure. (The stocks of Exxon, Chevron and Occidental yield 3.7%, 5.2% and 4.6%, respectively.) Spectra, our most generous payer, with a yield of 5.7%, looks like a solid bet, thanks to a rising tide of profits from its natural-gas pipelines. The master limited partnership recently hiked its quarterly payout by 1.2 cents, to 63 cents per share.

Advertisement
Advertisement

Most Popular

7 Surprisingly Valuable Assets for a Happy Retirement
happy retirement

7 Surprisingly Valuable Assets for a Happy Retirement

If you want a long and fulfilling retirement, you need more than money. Here are the most valuable retirement assets to have (besides money), and how …
August 3, 2020
Retired? Good Luck Getting a Mortgage, Even If You’re Wealthy
mortgages

Retired? Good Luck Getting a Mortgage, Even If You’re Wealthy

One 70-year-old’s story highlights the challenges. Prepare for more paperwork and hoops to jump through than you could imagine.
August 2, 2020
Turning 60 in 2020? Expect Lower Social Security Benefits
Coronavirus and Your Money

Turning 60 in 2020? Expect Lower Social Security Benefits

When you file for Social Security, the amount you receive may be lower.
July 30, 2020

Recommended

Bonds: 10 Things You Need to Know
Investing for Income

Bonds: 10 Things You Need to Know

Bonds can be more complex than stocks, but it's not hard to become a knowledgeable fixed-income investor.
July 22, 2020
13 Dividend Stocks That Have Paid Investors for 100+ Years
stocks

13 Dividend Stocks That Have Paid Investors for 100+ Years

Here are 13 dividend stocks that each boast a rich history of uninterrupted payouts to shareholders that stretch back at least a century.
May 21, 2020
20 Dividend Stocks to Fund 20 Years of Retirement
dividend stocks

20 Dividend Stocks to Fund 20 Years of Retirement

Each of these high-quality dividend stocks yields roughly 4%, and you can expect them to grow their payouts even more. That's a powerful 1-2 combo for…
August 5, 2020
Kiplinger's Weekly Earnings Calendar
stocks

Kiplinger's Weekly Earnings Calendar

Check out our earnings calendar for the upcoming week, as well as our previews of the more noteworthy reports.
August 2, 2020