Dividend-paying oil stocks to purchase amid the ongoing recovery from the COVID-19 pandemic have the potential to give investors opportunities to profit with both short-term trades and long-term patience.
The dividend-paying oil stocks to purchase will receive a lift from rising prices for crude as economic activity begins to resume in states around the country that are easing restrictions imposed by their governors in March after the number of COVID-19 cases and deaths began to spread quickly. With the economy starting to strengthen as non-essential businesses reopen to spur increased energy demand, crude oil prices rose to a 3-1/2 month high.
Dividend-Paying Oil Stocks to Purchase After Historic Mid-April Price Plunge
Oil prices, based on the WTI Crude Oil Spot Price, have dropped 38.23% during the past five years and endured a short-term crash in April 2020, when futures contracts for May delivery hit a historic low by plunging more than 100% to -$37.63 per barrel on April 20. That pricing meant producers literally needed to pay traders to take the oil off their hands when demand collapsed due to the COVID-19 crisis.
Bob Carlson, leader of the Retirement Watch advisory service and chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets, recently recommended Cohen & Steers MLP & Energy Opportunity (NASDAQ:MLOAX). The fund gain about 25% from May 12 through June 8 before plunging in the June 11 market selloff.
It is down 6.4% for the last month, 30.05% for the past three months and 3.44%% for the year to date. The fund’s current dividend yield is 7.90%.
MLOAX invests primarily in companies that provide midstream energy services, such as pipelines and storage tanks. Prices of these investments declined sharply because of the “dual catastrophes” of the oil price war and the coronavirus pandemic, Carlson analyzed.
“Energy prices seem to have hit a bottom, and there’s been a surge in these investments,” Carlson continued. “Even after the surge, they have a lot of room to the upside.”
As an actively managed fund, MLOAX can focus on the investments in each sector with the best fundamentals and values. After the oil price plunge, the fund began favoring companies likely to withstand a severe downturn, while avoiding over leveraged firms and those with weak balance sheets. It also increased its positions in Canadian companies because they are more insulated from global price shocks.
Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz during an interview before social distancing became the norm after the outbreak of COVID-19.
Supply Side Economics Affect Dividend-Paying Oil Stocks to Purchase
“Energy is all about the supply side economics right now, said Hilary Kramer, host of a national radio program called “Millionaire Maker” and head of the Value Authority and GameChangers advisory services. “A demand recovery will feel fantastic, but the real story is the chill on North American drilling, where rig counts have dropped to the lowest level on record and keeps declining week after week.”
The drilling reductions reflect oil and gas exploration and production (E&P) companies sacrificing five years of planning to “survive” and it is not really the kind of environment that tends to reward investors with medium-term time horizons, Kramer continued.
"If you're bullish on oil, buy for the long term and don't even look at it for the next five years,” Kramer said.
Paul Dykewicz interviews money manager Hilary Kramer, whose premium advisory services include 2-Day Trader, IPO Edge, Turbo Trader,High Octane Trader and Inner Circle.
Prospective oil stocks to consider include Chevron Corp. (NYSE:CVX), ConocoPhillips (NYSE:COP) and EOG Resources Inc. (NYSE:EOG), Kramer said. Each of them pays a dividend to offer investors yields of 5.78% in CVX, 3.99% in COP and 2.96% in EOG.
Chart courtesy of www.StockCharts.com
Chart courtesy of www.StockCharts.com
Chart courtesy of www.StockCharts.com
“You just want a sustainable business model and a proxy on crude upside,” Kramer said. “What you do not want is an overextended balance sheet that might not survive to see the recovery. Again, you'll be able to overweight innovation later."
COVID-19 has caused 10,434,835 cases and 509,799 deaths globally, along with 2,629,372 cases and 127,322 lives lost in the United States, as of June 30. America has more than double as many cases and deaths of any other nation, including China, where COVID-19 originated. A one-day spike in cases occurred in Florida, Georgia, Idaho, Tennessee and Utah on June 26, following recent public protests, reopening of businesses and resumption of activities in which many people chose not to use protective masks and social distance, as recommended by public health experts.
These dividend-paying oil stocks to purchase provide investors with a chance to profit from the recovery of oil prices, shrinking supply and growing demand as economic activity returns after countries around the world locked down non-essential businesses and idled a large percentage of workers. Investors who may follow the Wall Street adage of “sell in May and go away” would have missed out on last month’s market resurgence but there still is time to purchase dividend-paying oil stocks that have started to climb again.
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Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce,Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz.The book is endorsed by Joe Montana, Joe Theismann, Ara Paseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Follow Paul on Twitter@PaulDykewicz.
