Dj Chevron Corporation, Inst Holders, 3Q 2024 (Cvx)

The Oil/Energy market has been highly volatile, recently dropping below $70 per barrel. Concerns over weaker global demand, lackluster Chinese economic stimulus, and a surging U.S. dollar have weighed on market sentiment. On Thursday, Brent crude settled at $74.23 a barrel, while WTI finished at $70.10 — both still down on a year-to-date basis. Analysts warn that the planned production increases of OPEC+ could further depress prices, despite geopolitical uncertainties.

High-Yield Stocks: A Cushion for Investors

In times of oil market instability, high-yield large-cap stocks — defined as companies with a market capitalization of $10 billion or more — provide a haven for investors seeking stable returns. These stocks often offer attractive dividends, offsetting losses from commodity fluctuations. With their proven resilience and steady cash flow, they can mitigate market risks, ensuring a more balanced portfolio during volatile periods.

Canadian Natural Resources Limited CNQ, Chevron CVX and Kinder Morgan KMI stand out as compelling choices for investors seeking large-cap energy exposure.

CNQ, CVX and KMI Dividend Yield

Why Size Matters

These companies are financially strong, well-regarded, and widely covered by analysts. Their regular dividend payments make them particularly attractive to income-focused investors. For those seeking stability and a proven track record, large-cap firms hold strong appeal.

Although large-cap stocks may not match the growth potential of smaller companies, they offer greater price stability. This makes them an ideal choice for a steady approach without the sharp fluctuations often tied to commodity prices.

Our Choices

Canadian Natural Resources: It is one of the largest independent energy companies in Canada. The company is engaged in the exploration, development and production of oil and natural gas. Canadian Natural Resources boasts a diversified portfolio of crude oil (heavy as well as light), natural gas, bitumen and synthetic crude oil.

The Calgary-based CNQ beat the Zacks Consensus Estimate for earnings in three of the last four quarters, the average being 3.9%. Canadian Natural has a market capitalization of roughly $71.3 billion.

A major incentive for holding the CNQ stock is dividend. With a quarterly payout of 56.25 Canadian cents, CNQ shares currently yield 4.5% annually, well above the Zacks Oil/Energy sector average of 3.7%. Reflecting a shareholder-friendly nature, the Zacks Rank #3 (Hold) company recently hiked its payout by 7%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chevron: Based in San Ramon, CA, Chevron is one of the largest publicly traded oil and gas companies in the world, which participates in every aspect related to energy — from oil production to refining and marketing.

Chevron beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The #3 Ranked company has a market capitalization of roughly $289.9 billion.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

With a quarterly payout of $1.63 per share, the CVX stock has a 4% dividend yield, above the generous sector average and significantly over the S&P 500’s 1.2% average.

Kinder Morgan: Houston, TX-based Kinder Morgan is a leading midstream energy infrastructure provider in North America. The company operates pipelines across 83,000 miles to transport natural gas, crude oil, condensate, refined petroleum products, CO2 and other products.

Kinder Morgan, carrying a Zacks Rank of 3, is valued at some $62.2 billion. The energy infrastructure provider‘s 2024 earnings per share indicate 9.4% year-over-year growth.

KMI pays out a quarterly dividend of 28.75 cents, which gives it a 4% yield at the current stock price.

Zacks Investment Research

The transition from coal to natural gas is a significant part of global efforts to address climate change. Natural gas is often considered a "transition fuel" because it emits less carbon dioxide than coal. It complements renewable energy sources by providing a reliable backup when wind or solar generation is inconsistent. With liquefied natural gas (LNG) enabling global transportation of natural gas and ensuring its availability across markets, companies like Cheniere Energy Inc. LNG, Chevron Corporation CVX and Shell plc SHEL are well-positioned to benefit.

Why is LNG Demand Mounting Globally?

Natural gas is the cleanest-burning hydrocarbon and is in high demand worldwide to combat climate change. However, many places and consumers in need of the commodity are located far away from the gas fields and it is expensive to construct and transport through pipelines to far-off places.

Hence, natural gas must be cooled to shrink its volume so that it can be stored and shipped worldwide. According to data from Shell, LNG supplies were responsible for 14% of the global demand for natural gas in 2023.

LNG Outlook: Trends, Growth & Key Drivers in Global Demand

According to Shell's LNG outlook for 2024, while natural gas demand has already reached its maximum in some developed regions, global demand continues to rise, as highlighted below. This growth is largely fueled by emerging economies like China and India, which depend on natural gas as a transitional energy source to support their industrialization and decarbonization efforts.