The companies that produce oil -- or work for oil producers in the oil field -- are the ones most at risk during the ongoing oil crash. Some oil companies focus on exploration and research and may reinvest profit rather than pay out a dividend to investors. Stock Advisor launched in February of 2002. So, if it lowers its costs and minimizes the use of cash on hand, it should survive the harsh downturn ahead. But by punishing investors hungry for dividend income, companies opting to raise debt to pay a dividend can avoid a stock sell-off.

Many simply won't survive this downturn. In addition, Chevron maintains a solid credit rating of Aa2/AA. This will lower the overall output of oil and gas, helping to stabilize the sector.

Matthew DiLallo owns shares of Enbridge and Enterprise Products Partners. Not to mention, in the first half of 2023 capacity at the Sabine pass liquefaction project increases. And within its divestment program, BP will deliver $15 billion in asset sales by the middle of next year. Tyler Crowe owns shares of Enterprise Products Partners. Many simply won't survive this downturn. Matt DiLallo (Enbridge): Canadian oil pipeline giant Enbridge operates one of the more reliant businesses in the oil patch. You can follow him on Twitter for the latest news and analysis of the energy and materials industries: I think Chevron is a top pick right now thanks to the strength of its balance sheet. It forecast no meaningful declines in sales volumes and margins for the current quarter.

Though contract cancellations are a risk, its customers will make every effort to meet obligations, rather than pay a penalty. On the other hand, accelerated land and staff restructuring in North America will reduce costs. Cumulative Growth of a $10,000 Investment in Stock Advisor, 4 Top Oil Stocks to Buy Right Now @themotleyfool #stocks $CVX $PBA $ENB $EPD, Matthew DiLallo, Tyler Crowe, Jason Hall, and John Bromels, Chevron Is Still the Strongest Energy Stock, Chevron Dethrones Exxon as the Largest U.S. Oil Company. That will bring in $10 billion in proceeds, which will shore up its balance sheet. By the end of 2021, BP forecasts cost savings of around $2.5 billion. That should enable it to borrow the funds necessary to support its dividend, which currently yields 5.4%, and which the company has increased annually for the past 33 years. Add it all up and the pipeline giant offers investors a compelling blend of upside and income. Oil stocks have made many millionaires, but this highly cyclic industry is not without risks. Chris Lau, contributing author for InvestorPlace.com and numerous other financial sites. Connect with friends faster than ever with the new Facebook app. They chose oil behemoth Chevron (NYSE: CVX) and pipeline giants Enbridge (NYSE: ENB), Enterprise Products Partners (NYSE: EPD), and Pembina Pipeline (NYSE: PBA). Exxon’s Permian Basin faces the largest share of the capex reduction. It can easily cover the balance with existing liquidity thanks to its strong balance sheet. LNG has a sustainable business because ~85% of its business is contracted. These would be due in April 2030 and pay a 5% coupon. The average price target on Exxon Mobil stock is $51.15 (per Tipranks). . Given the overall durability of its business model, Enbridge expects to achieve its full-year cash flow forecast. With those adjustments, the company maintained its long-term outlook. The firm had over 1000 cargoes representing over 70 million tons exported from its liquefaction projects. Matthew is a senior energy and materials specialist with The Motley Fool. For Q4, the company reported a discounted cash flow per share of $1.02, down slightly from $1.03 in the previous year. [Editor’s note: this article was updated on April 21 to correct the name of a source quoted in the story.].

Oil companies are predicting months -- if not years -- of stagnant prices as oversupply, storage limitations, and reduced demand conspire to keep prices low. On Wall Street, analysts did not update their price target on BP stock for at least two weeks. So when the market eventually recovers, Exxon may flourish once again. That should give it the fuel to increase its high-yielding dividend at a similar pace. Previously, the company secured 2.5 billion CAD from its credit facilities. Enterprise Products is far enough away from the well to avoid the worst of this downturn, but also in the sweet spot of offering the kinds of services that are still needed. This revenue protection is only as good as the financials of its customers, though.

Copyright, Trademark and Patent Information. Conversely, “looking to more difficult sources of cash, like cutting dividends and share buyback programs” can ensure the long-term viability of a company’s stock. That should enable it to borrow the funds necessary to support its dividend, which currently yields 5.4%, and which the company has increased annually for the past 33 years. Oil prices have gone on a wild ride this year, taking most oil stocks with them. Management selected this location because it responds most quickly to adjustments. And to some extent investors have acknowledged how strong Enterprise Products should prove to be. The company is preparing for a worst-case scenario in which the lock-down will have long-lasting negative effects. It received $3.4 billion from asset sales so far. That's what makes Pembina Pipeline look like an interesting oil stock these days: its business, its financials, and its customer base. The companies that produce oil -- or work for oil producers in the oil field -- are the ones most at risk during the ongoing oil crash. That's leading many investors to consider buying oil stocks for the next leg of the rebound. Not only is Enterprise Products one of the best bargains in the oil patch today, I think it will prove one of the safest, too. John Bromels has no position in any of the stocks mentioned. Tyler Crowe (Pembina Pipeline): Because the oil and gas industry is so interconnected, looking at a company's financials isn't enough to determine if it is going to get through this downturn with minimal financial damage. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. Show full articles without "Continue Reading" button for {0} hours. Investing in oil stocks may be a good idea, depending on your investment strategy. Microsoft may earn an Affiliate Commission if you purchase something through recommended links in this article. By Ellen Chang, Contributor Aug. 4, 2020, at 3:16 p.m. More. Cheniere expects consolidated adjusted EBITDA of $3.8 billion – $4.1 billion. That's why, despite having offered up Enterprise Products Partners already recently as an oil stock worth buying, I'm pitching it once again. Add it all up and the pipeline giant offers investors a compelling blend of upside and income. In addition, The oil industry is a risky place right now, but, didn't have any issues with crashing crude prices. Last year, its maintenance capital fell as it sold assets in 2018. This revenue protection is only as good as the financials of its customers, though. BP has cut capital spending for the 2020 fiscal year to $12 billion, 25% below its previous full-year guidance.

They would do well to remember that the companies that survive the economic fallout of weak energy demands will be those that best preserve cash. The oil industry is a risky place right now, but dividend investors can feel reasonably safe taking a stake in Chevron. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. Oil companies are predicting months -- if not years -- of stagnant prices as oversupply, storage limitations, and reduced demand conspire to keep prices low. Thus, it will generate enough money to cover its 7% dividend yield as well as the bulk of its expansion program. That's a lot better than most oil stocks these days, considering that many face a real risk of going bankrupt.

That's leading many investors to consider buying oil stocks for the next leg of the rebound. Vikas Mittal, the J. Hugh Liedtke Professor of Marketing for the Jones Graduate School of Business at Rice University, said that oilfield services companies that invested in technology should exercise special care in job cutting. That's why, despite having offered up Enterprise Products Partners already recently as an oil stock worth buying, I'm pitching it once again. John Bromels (Chevron): Even though oil prices have moved above $30 a barrel in recent days, they're still at historically low levels. A resurgence in the energy sector at the start of the year ended abruptly following the global outbreak of novel coronavirus. Copyright © So as other firms cut their dividend and their stock price falls, Royal Dutch is positioned to buy those firms out. The quality of its customers and their ability to pay the bills is a concern as well. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*. I think Chevron is a top pick right now thanks to the strength of its balance sheet. Here's why they think this group could pay big dividends for investors who buy right now. 2020 InvestorPlace Media, LLC. The liquidity injection will also lift investor confidence, even though (perhaps because) the firm does not need the funds. Enterprise Products is far enough away from the well to avoid the worst of this downturn, but also in the sweet spot of offering the kinds of services that are still needed. Oil prices have gone on a wild ride this year, taking most oil stocks with them. The firm expects to take a $400 million to $800 million impairment charge for the quarter. With a reliable revenue stream, a manageable debt load, and a plan to defer $1 billion in capital spending between 2020 and 2021 to conserve cash, Pembina appears to have the foundation in place to weather this oil market storm in decent shape. They chose oil behemoth Chevron (NYSE:CVX) and pipeline giants Enbridge (NYSE… With a dividend yield of 7.5%, it's one of the better buys in the oil and gas industry right now. So Enbridge “retains all the cash flow from those assets.”. All rights reserved. has said that the company will lower its yearly capital expenditure, the company announced an offering of 1.25 billion CAD, This Investing Advantage Could Be the Secret to Massive Wealth, Trump vs. Biden: Stocks to Buy No Matter Who Wins the White House, 7 Monster Growth Stocks With Double-Digit Upside, 5 Value Stocks To Buy Now Beating The S&P 500 In 2020, 3 Utility Stocks With Tried-and-True Gains, 7 Cryptocurrencies to Stand the Test of Time, As More Competitors Enter the EV Space, Nio Stock Is Just Heating Up. They chose oil behemoth Chevron (NYSE:CVX) and pipeline giants Enbridge (NYSE:ENB), Enterprise Products Partners (NYSE:EPD), and Pembina Pipeline (NYSE:PBA). I think Chevron is a top pick right now thanks to the strength of its balance sheet. He shares his stock picks so readers get original insight that helps improve investment returns. Matthew DiLallo, Tyler Crowe, Jason Hall, and John Bromels. At an energy conference on Mar. Here are the top 3 oil & gas stocks with the best value, the fastest earnings growth, and the most momentum. The company has less debt -- on both an absolute basis and compared to its market cap or EBITDA -- than any of the other integrated majors. Matt DiLallo (Enbridge): Canadian oil pipeline giant Enbridge operates one of the more reliant businesses in the oil patch.

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