Since the onset of the coronavirus pandemic, the market has witnessed wild swings in oil prices. This reflects that notorious volatility is an integral part of the energy sector. However, due to some key factors, dividend-paying stocks in the same space are relatively less volatile, thereby poising Marathon Petroleum Corporation MPC,EOG Resources, Inc. EOG and Phillips 66 PSX for growth.
Extremely Volatile Energy Market
We should never forget how oil prices behaved since the beginning of the coronavirus outbreak. The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The commodity’s price plunged to a negative $36.98 per barrel on Apr 20, 2020.
However, with the rapid developments of vaccines by scientists, which in turn led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data are per the U.S. Energy Information Administration. Oil is currently trading at close to $70 per barrel.
Dividend Stocks to Keep an Eye On
Overall oil pricing scenario seems scary, which could easily deter an investor from allocating money to energy companies. Despite this volatility constraint, investors could consider dividend-paying companies belonging to the industry. This is because, generally, companies with stable dividend-paying history are usually relatively less volatile than stocks with no dividend history. It is expected that companies that have been rewarding stockholders with dividends will try their best to continue paying at the same pace or higher, making the stocks attractive and less volatile to the vagaries of the market.
We have employed our Stock Screener to zero in on three such stocks. All the stocks carry a Zacks Rank #3 (Hold). With a dividend yield of more than 2%, all the companies have raised dividends over the past five years. Moreover, with a payout ratio of less than 60%, the companies ensure sustainability with enough scope for future dividend increases.
3 Stocks to Gain
Marathon Petroleum Corporation: As a leading, integrated, downstream energy player, Marathon Petroleum is the operator of the largest refining system in the nation. MPC is well poised to gain on strong refining fundamentals, backed by the reduction in refining capacity across the world. It pays out a quarterly dividend of 75 cents ($3.00 annualized) per share, which gives it a 2.78% yield at the current stock price. (Check Marathon Petroleum’s dividend history here).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marathon Petroleum Corporation Dividend Yield (TTM)
Marathon Petroleum Corporation dividend-yield-ttm | Marathon Petroleum Corporation Quote
EOG Resources, Inc: In the United States, EOG Resources is a leading exploration and production player. Since transitioning to premium drilling, EOG boasted that it has returned billions in cash to shareholders. The firm pays a quarterly cash dividend on the common stock of 82.5 cents ($3.30 annualized) per share. EOG also paid a special dividend of $1.00 per share on Mar 30. (Check EOG Resources’ dividend history here).
EOG Resources, Inc. Dividend Yield (TTM)
EOG Resources, Inc. dividend-yield-ttm | EOG Resources, Inc. Quote
Phillips 66: Phillips 66 is a diversified energy manufacturing and a logistic player with a presence in Midstream, Chemicals, Refining, and Marketing and Specialties businesses. With a strong focus on disciplined capital allocation and maintaining financial strength, PSX is well-positioned to continue rewarding shareholders with dividend growth. Phillips 66 pays a quarterly cash dividend on the common stock of $1.05 ($4.20 annualized) per share. (Check Phillips 66’s dividend history here).
Phillips 66 Dividend Yield (TTM)
Phillips 66 dividend-yield-ttm | Phillips 66 Quote
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