Higher oil prices help fuel dividends.
What a difference a year makes for oil prices. Last summer, oil was bouncing around the middle $40s, and now comfortably in the middle $60s — a gain of more than 40 percent in just 12 months. Oil crossed $70 a barrel in May to hit its highest level since 2014. The news has been great for energy stocks dependent on crude oil prices to determine their margins and profits. But it’s even better news for companies that share those profits with investors through dividends. Here are eight energy stocks that have great yields now thanks to comparatively better energy prices in 2018.
Occidental Petroleum Corp. (ticker: OXY)
Though perhaps not as well-known as oil behemoth ExxonMobil Corp. (XOM), Occidental is a giant in its own right with a nearly $70 billion market capitalization and roughly 100 years of operation as a key player in the industry. OXY is an integrated energy company that explores new oil and gas fields, as well as processing and transporting finished products worldwide. A soft environment for energy pricing kept Occidental shares down for much of the last three years. However, better pricing has helped its profits — and its dividend as recent increases have boosted the payout.
Current yield: 3.6 percent
CVR Refining (CVRR)
CVR owns and operates crude oil refineries in Kansas and Oklahoma, processing and preparing oil for distribution and transportation. As such, CVRR isn’t directly exposed to energy prices — however, as crude oil prices tick higher and explorers are more willing to pump it out of the ground, demand for CVRR refining services grow in kind. The result has been a great run for CVR Refining as its shares have surged roughly 40 percent since January. And while the dividend can fluctuate by the quarter, the last four distributions add up to an impressive double-digit yield at current pricing.
Current yield: 12.2 percent
Sinopec (SNP)
The global energy market has allowed for plenty of players overseas, too. That’s evidenced by state-owned oil giant China Petroleum & Chemical Corp., or Sinopec. The integrated energy company boasts a roughly $120 billion market value, and has simply been on a tear since December as higher oil prices and strong global demand have lifted shares. And while talk of a global trade war has shaken some parts of Wall Street, this Chinese energy player has nothing to fear thanks to strong ties to regional players and big domestic demand in mainland China.
Current yield: 6.8 percent
Crestwood Equity Partners (CEQP)
Crestwood Equity Partners is an energy middleman, providing infrastructure and transportation for oil and gas companies operating in U.S. shale fields. While midstream players are typically insulated from risk, CEQP was not immune to serious declines across 2014 and 2015 as energy prices fell sharply. That’s because shale fields and fracking companies demand a higher end price to justify relatively higher extraction costs, and with weak rates they simply weren’t as eager to drill. That has changed and CEQP operations are really humming in 2018 — as is its dividend.
Current yield: 7.7 percent
WPX Energy (WPXP)
WPX Energy is an independent oil and natural gas producer that operates in Texas, New Mexico, North Dakota and Colorado. At the end of last year, its fields had proven reserves topping 430 million barrels of oil and equivalents. The value of this company is almost directly linked to the value of its untapped energy resources. So as both crude oil and natural gas prices have firmed up, it’s no surprise that WPXP stock has risen more than 50 percent in the last 12 months and delivered a share of that capital back to its stockholders.
Current yield: 4.2 percent
Cheniere Energy Partners (CQP)
Cheniere Energy Partners is a limited partnership not to be confused with its parent, natural gas giant Cheniere Energy. CQP is focused solely on the operation of Sabine Pass LNG terminal in Louisiana — a crucial piece of energy infrastructure, and one of the best midstream bets out there. Sabine Pass is one of the few export terminals for liquefied natural gas, making it a great play on a future where America is a net exporter of energy. And as a midstream toll-taker, CQP charges a fee for use of its terminals. That fuels consistent and sustainable dividends.
Current yield: 6.6 percent
Plains All American Pipeline (PAA)
Plains All American is a master limited partnership that transports, stores and markets crude oil. While like most midstream players it has a degree of insulation from the volatility of energy prices, PAA is still a chief beneficiary of increasing American crude oil production now that prices are good and the wells are pumping more than in past years. It also helps that PAA has been an aggressive buyer of crude oil terminals and had invested in building others, even as energy prices were soft. That makes it well-positioned to profit in the current environment.
Current yield: 5 percent
Viper Energy Partners (VNOM)
An aggressive midsized exploration company, Viper is valued at just $3 billion or so in market value — and that’s after an impressive run of about 70 percent in the last 12 months, too. You wouldn’t normally expect a company this size to invest so much in dividends back to shareholders, but ever since instituting payouts back in the rough environment of 2014, VNOM has made its dividend a priority. And thanks to better times and bigger profits, that dividend has nearly doubled in four short years.
Current yield: 7.2 percent
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8 Energy Stocks That Pay Investors originally appeared on usnews.com
