Image: BigstockSince the onset of the coronavirus pandemic, the market has witnessed wild swings in oil prices. This reflects the fact 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 positioning stocks like ConocoPhillips (COP – Free Report), EOG Resources, Inc. (EOG – Free Report), and Phillips 66 (PSX – Free Report) 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 April 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 March 8, 2022. Oil price data are per the U.S. Energy Information Administration. Oil has recently been seen trading at more than $80 per barrel.
Dividend Stocks to Keep an Eye On
The overall oil pricing scenario may seem 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. Two of the stocks discussed presently carry a Zacks Rank #3 (Hold) rating. With a dividend yield of more than 2%, all of the companies have raised dividends over the past five years. Moreover, with a payout ratio of less than 60%, these companies ensure sustainability with enough scope for future dividend increases.
3 Stocks to Gain – ConocoPhillips
ConocoPhillips is among the leading exploration and production companies in the world. On May 29, ConocoPhillips finalized an agreement to acquire Marathon Oil in an all-stock deal valued at $22.5 billion, which also incorporates $5.4 billion in net debt.This acquisition will enable ConocoPhillips to expand its presence in prolific, low-cost U.S. basins such as Eagle Ford, Bakken, Delaware, and Permian, adding more than 2 billion barrels of resources. In addition to realizing cost synergies and generating shareholder value, ConocoPhillips, a leading upstream energy company, anticipates this transaction to be immediately accretive to its earnings and cash flows.The exploration and production giant pays out a quarterly dividend of 58 cents ($2.32 annualized) per share, which gives it a 2.02% yield at the recent stock price.
EOG Resources, Inc
In the United States, EOG Resources is a leading exploration and production player. Since transitioning to premium drilling, EOG Resources boasted that it has returned billions in cash to shareholders.The firm pays a quarterly cash dividend on the common stock of 91 cents ($3.64 annualized) per share, which gives it a 2.87% yield at the recent stock price.
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, Phillips 66 is well-positioned to continue rewarding shareholders with dividend growth. Phillips 66 raised its quarterly cash dividend on the common stock at $1.15 ($4.60 annualized) per share.More By This Author:Why Stocks Are On Pace For A Historic Second Half
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