In this article, we will take a look at the top 10 energy dividend stocks to invest. You can skip our analysis of the energy sector and go to Top five energy dividend stocks to invest in.
Energy stocks are having their day with oil prices on March 5 bouncing to their highest levels in more than a year after OPEC countries agreed not to increase oil supply in April and maintain their wait. to see, while the global economy begins to recover slowly. Saudi Arabia’s largest oil producer has agreed to maintain its voluntary cut in production until April. Goldman Sachs increased its estimate of Brent oil to $ 75 per barrel in the second quarter and $ 80 for the third quarter, while UBS also increased its forecast to $ 75 per barrel for Brent and $ 72 for WTI in the second half. of the year.
Should you buy energy stocks in 2021?
Investing in the energy sector has become complicated, following rapidly changing trends. The world is moving away from carbon and this transition is creating anxiety among energy investors. The coronavirus crisis has also exacerbated problems for the industry, as demand for oil and gas has dropped dramatically around the world. But the energy sector is perennial for investment because human economic activity depends on industry. As the world returns to normal after the availability of coronavirus vaccines and the drop in cases of COVID-19, energy stocks will recover. For example, according to a report by the US Energy Information Administration, energy consumption in aviation would return to pre-COVID levels in 2030.
Another concern of the market with the energy sector is the rising tide of the green energy revolution. Large energy companies are already preparing for this inevitable change. Several oil and gas companies have launched billions of dollars of funds to accelerate their transition to clean energy. For example, Duke Energy has set a goal to achieve net zero carbon emissions by 2050. Similar goals have been set by Exxon, Xcel, Southern Company and several other oil and gas companies. Earlier this year, Canadian green energy startup Eavor Technologies announced $ 40 million led by BP Ventures and Chevron Technology Ventures.
Choosing the best stocks of energy dividends
In choosing the best energy dividend stocks to invest in, we gave preference to energy companies that have consistently increased their dividends in recent years. Income investors should focus on the history of companies paying dividends, not earnings. If a company’s income is extremely high, it shows that it is not investing much in its future projects and focusing more on shareholder return, which can be attractive only in the short term. On the other hand, it is expected that companies that have been consistently increasing their dividends over the past 5 to 15 years will continue to do so. Investing in these companies to earn dividends would minimize uncertainty and ensure regular checks on dividends.
Choosing the best dividend companies that can guarantee regular revenue became more important after the COVID-19 crisis. Financial volatility is making even hedge funds find it difficult to maintain their earnings. The sector has been tarnished in the past decade, during which its covered returns have failed to keep up with the uncovered returns of market indices. On the other hand, Insider Monkey research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 88 percentage points since March 2017. Between March 2017 and February 5, 2021, our stock choices returned 187.5%, against 75.8% for SPY. Our stock choices outperformed the market by more than 111 percentage points (see details here). We were also able to identify in advance a select group of hedge fund holdings that performed significantly less than the market. We have followed and shared the list of these actions since February 2017 and they lost 13% by November 16. That is why we believe that hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can sign up for our free newsletter on our homepage to receive our stories in your inbox.
Kanok Sulaiman / Shutterstock.com With this industry perspective in mind, let’s start our list of the top 10 energy dividend stocks to invest.
10. National Fuel Gas Company (NYSE: NFG)
Number of hedge fund holders: 13 Dividend yield: 3.68%
The National Fuel Gas Company offers a variety of services in the energy sector, including exploration, production, pipelines and storage. In the most recent quarter, the company’s adjusted EPS was $ 1.06, beating Street’s estimates by $ 0.02. The stock has risen about 25% in the last 12 months. The energy company has paid dividends for 118 consecutive years and has increased its annual dividend for 50 consecutive years.
According to our database, the number of long positions of NFG hedge funds decreased at the end of the fourth quarter of 2020. 13 hedge funds hold a position in National Fuel Gas at the end of December, compared to the 16 funds in the third quarter. The company’s largest shareholder is Mario Gabelli’s GAMCO Investors with 1.4 million shares worth $ 57.3 million.
9. MPLX LP (NYSE: MPLX)
Number of hedge fund holders: 13 Dividend yield: 10.94%
MPLX is one of the top 10 energy dividend shares to invest. The company has a network of crude oil and refined products pipelines, light product terminals, gas processing plants and fractionation facilities. With around 10% dividend yield, MPLX is an attractive dividend share in the energy sector. The company said in February that it plans to use surplus cash to repurchase shares, as it believes its shares are undervalued.
At the end of the fourth quarter, 13 hedge funds in the Insider Monkey database of 887 funds held stakes in MPLX LP, compared with 14 funds in the third quarter. Zimmer Partners is the company’s largest shareholder, with 2.8 million shares in the amount of US $ 60.2 million.
8. ONEOK, Inc. (NYSE: OKE)
Number of hedge fund holders: 22 Dividend yield: 7.85%
OneOK is a gas company based in Tulsa, Oklahoma, which owns major liquid gas systems for natural gas. In the fourth quarter, the company’s adjusted EBITDA jumped 12%, but did not meet Street’s forecasts. For fiscal year 2021, the company expects EPS in the $ 2.40 to $ 3.08 range, below the $ 3 consensus.
According to our database, 22 hedge funds maintained an OKE position at the end of the fourth quarter. The company’s most significant stakeholder is Two Sigma Advisers, with 627,200 shares in the amount of US $ 24 million.
7. Magellan Midstream Partners, LP (NYSE: MMP)
Number of hedge fund holders: 22 Dividend yield: 9.24%
With a dividend yield of 9%, Magellan Midstream Partners is one of the main energy dividend stocks to invest. The company has ammonia and oil pipelines, more than 80 terminals for petroleum products, refined pipelines and crude oil. The company’s fourth-quarter results were better than expected, but stocks fell with a 25% year-over-year decline in distributable cash flow.
With a $ 72.9 million stake in Magellan Midstream Partners, 683 Capital Partners holds 1.7 million shares of the company at the end of the fourth quarter of 2020. Our database shows that 22 hedge funds held stakes in MMP at the end of the fourth quarter, against 20 funds at the end of the third quarter.
6. Phillips 66 (NYSE: PSX)
Number of hedge fund holders: 26 Dividend yield: 4.26%
Philips 66 is one of the top 10 energy dividend stocks to invest. The company was formed after a spin-off of ConocoPhillips. In February, the company declared a dividend of $ 0.90 per share. Its future yield is 4.83%. The company recorded a larger-than-expected loss in the fourth quarter due to weak demand and the impact of COVID-19.
There were 26 hedge funds in our database with stakes in Phillips 66, compared to 27 funds in the third quarter. East Side Capital is the company’s largest shareholder.
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Disclosure: None. Top ten energy dividend stocks to invest in is originally published in Insider Monkey.