Top 3 Dividend Stocks To Buy For The Summer

Watch as profits and dividends skyrocket this summer for these three seasonal businesses that perform best in the second and third quarter of the year. Now is the time to start accumulating a position in these stocks that could return high double-digits by late fall of this year.

You have probably noticed that gasoline prices are starting to rise and have increased quite a bit in just the last few weeks. In my area, gas is up about 60 cents per gallon and seems to be climbing every day. The stocks that see immediate profit increases from higher fuel prices are usually the refining companies. The cyclical nature of the refining business has set these stocks up for some very nice gains between now and next fall, and dividend focused investors can count on some nice quarterly payouts.

Refining is an interesting industry to analyze because the prices of both the raw material, crude oil, and end product, gasoline, diesel, heating and jet fuel, are set in the commodity markets. This means that gross refining margins, usually measured on a per barrel basis, are mostly out of control of the refining companies. The factors these businesses do control are their refining efficiencies, which drive down the expenses to refine a barrel, and their sourcing practices, where they buy and how they transport crude oil.

The gross refining margin generated by a refinery can be estimated by looking at prevailing crude oil and fuel prices. Several sources publish “crack spreads” which calculate the profit per barrel of crude oil based on the price of crude and how much gasoline and other fuels are distilled out of the typical barrel.

I track my own crack spread using the NYMEX spot price data for WTI crude oil, New York Harbor gasoline and Diesel fuel. This price data is published weekly on the Energy Information Agency website.

Historically, crack spreads and refining margins are seasonal, with refiners generating the most profits in the spring and summer driving seasons and margins tightening through the winter. Last year, the crack spread I use averaged $21 to $22 per barrel in the second and third quarter and dropped to $14.50 per barrel in the fourth quarter. Through the first quarter of 2016, the spread is averaging under $13 per barrel.

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Disclosure: There are currently over twenty of these stocks to choose from in my  more

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