The global energy crisis could push oil prices above $ 100 a barrel for the first time in years and trigger a global economic crisis, Bank of America warned on Friday.
“[O]Prices could rise and lead to a second round of inflationary pressures around the world, ”analysts such as Francisco Blanch wrote in a note. “In other words, we may be one storm away from the next macro hurricane.”
Of course, one of the best ways to defend your portfolio against rising oil prices is to invest in oil stocks. Despite rising energy prices, some large dividend-paying oil producers continue to deliver returns in excess of 5%.
It might be worth fixing them now before oil prices really take off, possibly with some of the your spare change.
While many large energy companies are constantly moving toward renewables, Exxon is committed to oil and gas, providing investors with a relatively pure way to jump into space.
Although Exxon is unlikely to win the favor of socially and environmentally conscious investors in the short term, it is highly likely that management’s commitment to fossil fuels is the least risky approach for shareholders.
In the second quarter, for example, Exxon made $ 4.7 billion in profit on revenue of $ 67.7 billion thanks to the significant recovery in demand. And in a Securities and Exchange filing later this week, Exxon said oil will likely increase its third-quarter earnings by $ 700 million to $ 1.5 billion.
“We are reaping significant benefits from an improved cost structure, strong operating performance, and low supply cost investments that together are generating attractive returns and strong cash flow to fund our capital program, pay dividends and reduce debt, ”said President and CEO Darren Woods.
With stocks still out 6% from their 52-week highs and offering an especially high dividend yield of 5.9%, it might be time to take advantage of that operating momentum with some extra money.
Chevron is another oil giant that income investors might want to consider.
While the company has not invested much capital in renewable energy sources, Chevron’s significant position in the attractive Permian Basin and impressive free cash flow generation should give investors plenty of reason to be optimistic.
In the most recent quarter, Chevron produced profits of $ 3.1 billion on revenue of $ 36 billion. Meanwhile, free cash flow posted a multi-year high of $ 5.2 billion.
Management mentioned improving market conditions and merger synergies for strong results.
“Our free cash flow was the highest in two years due to strong financial and operating performance and lower capex,” said President and CEO Mike Wirth. “We will resume share buybacks in the third quarter at an expected rate of $ 2-3 billion per year.”
Chevron shares are down 8% from their 52-week highs and currently offer a 5.3% dividend yield, giving investors in dividend value something to think about.
Chevron is undoubtedly trading at more than $ 100 a share. But you can get a piece of Chevron using a popular stock trading app that lets you buy fractions of shares with all the money you are willing to spend.
For investors looking for a great energy action that’s a bit more forward-thinking, BP could be the answer.
The administration’s plans to reduce hydrocarbon production by 25% by 2025 and 40% by 2030 is easily the most aggressive transition to renewables among the major oil companies. That could put BP in a stronger competitive position than its industry peers over time.
And the best part? BP’s rapid withdrawal from oil investments does not appear to be affecting its short-term results too negatively.
In the most recent quarter, the company earned $ 2.8 billion while generating $ 5.4 billion in operating cash flow. BP even raised the dividend 4% by starting a $ 1.4 billion share buyback with first-half surplus cash flow.
“We have been executing bp’s strategy to become an integrated energy company for a year and we are making good progress, delivering another quarter of strong performance as we invest for the future in a disciplined manner,” said CEO Bernard Looney.
Shares in BP are down 3% from their 52-week highs and offer a 4.8% dividend yield.
How to buy these big oil stocks
You don’t have to be an oil tycoon to start investing in these great energy stocks.
If you are working on a smaller budget, you may want to use an investment app that allows you to buy “portions” of stocks for big oil companies, especially one that comes with no fees or commissions.
And if you are still undecided about jumping, some investment applications It will even give you a free share from Exxon, Chevron, or BP just for signing up.
Another low-budget option is to use an application that allows you to invest with just your “spare change”.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.