With thecoronavirus pandemic gradually coming under control,it is time to include energy stocks inone’sportfolio asheightened optimism has spurred oil prices on anorthbound journey— a trend that is likely to continue. Some of the oil explorers and producers have already raised dividends,and investors can again expect lucrative returns from energy companies since the overall business scenario is improvingdrastically.
Oil At Pre-Pandemic Mark
The price of West Texas Intermediate crude, which is trading above $65 per barrel (at pre-pandemic levels), has improved significantly since April 2020, when oil was in the negative territory. The momentum is likely to continue since the coronavirus vaccine rollout will possibly help the economy recover strongly this year, thereby spurringdemand.
Recently, the price of oil jumped to record levels in more than a year after it was decided by OPEC+ (OPEC and its non-OPEC partners) that they will extend most of the oil output cuts till April. Thus, with favorable crude pricing scenario, the exploration and production activities will possibly ramp up. In fact, explorers and producers have been returning to shale plays as reflected in weekly rig count data of Baker Hughes Company BKR.
Hopes For Lucrative Dividends
With exploration and production activities ramping up andbrightoutlook for upstream businesses, energy companies are well-poisedto bounce back from pandemic-lows with rooms for handsome cashflows. This, in turn, islikelytohave paved the ways for upstream energy players to reward investors with lucrative dividend payments again.
Notably, two of the major exploration and production companies that recently announced dividend hikes are Pioneer Natural Resources Company PXD and EOG Resources, Inc. EOG.
3 Stocks to Buy
Given the backdrop it is abundantly clear that investors pouring money in the energy space are likely to get rewarded with lucrative dividend payments. However, it would be a daunting task to pick the right company from the stock universe. Here comes our proprietary stock screener. Based on the screening criteria the companies will either carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). Additionally, the stocks are rewarding dividend yields more than S&P 500. You can see the complete list of today’s Zacks #1 Rank stocks here.
EOG Resources Inc, headquartered in Houston, TX, has premium drilling locations in all the prolific shale plays in the United States that include Delaware basin, a sub-basin of the broader Permian. The company, with a Zacks Rank of 2, has a dividend yield of 2.01%, higher than S&P 500’s 1.4%. In fact, EOG Resources has been paying higher dividend yields over the past few quarters. Not only that, the firm has also witnessed upward earnings estimate revisions for 2021 in the past 30 days.
Headquartered in Midland, TX, Diamondback Energy, Inc. FANG is a pure-play Permian player with presence in more than 347,000 net acres in the Permian. The company has more than 12,300 gross horizontal locations, brightening its production outlook. Notably, the Zacks #1 Ranked stock has a dividend yield of 1.9%. It is likely to see earnings growth of 96.1% in 2021.
ConocoPhillips (COP) has a major focus on prolific resources that include Permian, Eagle Ford and Bakken. The Zacks Rank #2 stock has dividend yield of 2.93% and witnessed upward earnings estimate revisions for 2021 in the past 30 days.
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Pioneer Natural Resources Company (PXD): Get Free Report
EOG Resources, Inc. (EOG): Free Stock Analysis Report
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Baker Hughes Company (BKR): Free Stock Analysis Report
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