3 Oil Stocks That Refuse To Give Up Their Dividend

The market has drifted into uncharted waters with the global pandemic creating an unprecedented level of ambiguity. High yielding stocks with the balance sheet health and/or cash-flows to maintain their dividend may be a safe place to put some of your cash to work. Today, I am going to take a look at the oil industry, where maintaining dividends is the highest priority.

The S&P 500 has had a wild 2 months with a 35% market crash followed swiftly by a 25%+ recovery, catalyzed by the unprecedented level of monetary support the Federal Reserve has provided. This support has ‘artificially’ propping up the asset markets. Now the market is bracing itself for a wave of atrocious Q1 earnings reports and more pandemic headlines that will fuel the market.

May crude oil futures plummeted below $10 per barrel today for the first time since the '90s, as inventory spikes and storage becomes a central issue. The oil supply glut is maxing out the capacity of oil storage facilities, and producers are being forced to substantially reduce production.

Crude futures for June and the following months are trading at more than double May’s price as traders’ and hedgers price in the possibility of the economy opening back up resurging oil demand.  

The Oil Dividend

Oil companies are doing everything in their power to maintain their robust dividend yields, which have surged into the high single-digits and even double-digits as share prices plunge. The largest energy companies are liquid enough to maintain their dividend without turning a profit for quite some time.

Below are the financial profiles of my favorite publicly traded oil enterprises. Look for upcoming earnings among these companies for clarity about each firm’s plan to mitigate risk and capitalize on the adverse environment in which they are operating. Bankruptcies and consolidation in this industry is likely over the next 12 months and well-capitalized firms will have the opportunity to expand their operations.

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