what is enb?

By Aristofanis Papadatos for Sure Dividend

Inflation has soared to a 40-year high this year due to the immense fiscal stimulus packages offered by the government in response to the pandemic. Consequently, income-oriented investors are struggling to protect their portfolios from losing real value.

High-dividend stocks are great candidates for income-oriented investors under the current circumstances, though investors should perform their due diligence to make sure that the dividends of these stocks are safe.

Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM

In this article, we will discuss the prospects of three high-yield stocks that benefit from high oil and gas prices, namely BP (BP), Enbridge (ENB) and ONEOK (OKE).

BP

BP is one of the largest oil and gas corporations in the world, with a market capitalization of $97 billion. It operates in t

Check Out These Oil Stocks! BP, (ENB) Enbridge, ONEOK (OKE) - 3 Dividend Oil Stocks With High Yields | Sure Dividend

Check Out These Oil Stocks! BP, (ENB) Enbridge, ONEOK (OKE) - 3 Dividend Oil Stocks With High Yields | Sure Dividend

Sure Dividend Sure Dividend 12.05.2022 17:46
By Aristofanis Papadatos for Sure Dividend Inflation has soared to a 40-year high this year due to the immense fiscal stimulus packages offered by the government in response to the pandemic. Consequently, income-oriented investors are struggling to protect their portfolios from losing real value. High-dividend stocks are great candidates for income-oriented investors under the current circumstances, though investors should perform their due diligence to make sure that the dividends of these stocks are safe. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM In this article, we will discuss the prospects of three high-yield stocks that benefit from high oil and gas prices, namely BP (BP), Enbridge (ENB) and ONEOK (OKE). BP BP is one of the largest oil and gas corporations in the world, with a market capitalization of $97 billion. It operates in two segments: upstream and downstream (mostly refining). BP has accumulated an excessive debt load, mostly due to its catastrophic accident in the Gulf of Mexico in 2010, which has cost the company approximately $70 billion so far. As this amount is 72% of the market capitalization of the stock, it is easy to understand its impact on the company. The high debt load of BP has also resulted from the extremely generous dividends of BP, which has maintained its shareholder-friendly character even under the most adverse business conditions. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM Fortunately, BP is thriving right now. The price of oil has rallied to a 13-year high this year thanks to the recovery of global demand from the pandemic and the sanctions of western countries on Russia for its invasion in Ukraine. As Russia produces 10% of global oil output, the oil market has become extremely tight. A similar situation is evident in the natural gas market. European gas prices have skyrocketed to all-time highs in recent months due to tight supply from Russia, which provides approximately 40% of natural gas consumed in Europe. In addition, Europe has begun to import LNG cargos from the U.S. aggressively in an effort to shift away from Russia and thus the U.S. natural gas market has become extremely tight. As a result, the U.S. natural gas price has surged to a 13-year high. The above conditions are ideal for BP, which is highly leveraged to the prices of oil and gas, especially given its high debt load. Thanks to its excessive profits in the current environment, BP has been reducing its debt load at a fast pace in recent quarters and thus it has added another growth driver, namely lower interest expense. In the most recent quarter, BP more than doubled its earnings per share, from $0.78 in last year’s quarter to $1.92, and exceeded the analysts’ consensus by an impressive $0.55 (40%). The earnings per share of BP were the highest of the company in the last decade. Moreover, as the sanctions are not likely to be removed anytime soon, BP is expected to post 10-year high earnings this year. BP cut its dividend by 50% in 2020 due to the impact of the pandemic on its business but it is still offering an attractive 4.4% dividend yield. The company has a payout ratio of only 27%, which provides a wide margin of safety to the dividend. BP raised its dividend by 4% last year and stated that it can continue raising its dividend by 4% per year until 2025 as long as the price of oil remains above or around $60. BP also expects to be able to repurchase approximately $1.0 billion of shares per quarter. As this buyback rate corresponds to a 4% annual reduction of the share count, it provides a meaningful boost to the bottom line. Read next: (TSLA) Tesla Stock Prices Facing Trouble Amidst Rising Prices| FXMAG.COM Overall, as long as oil prices remain above $60, BP will continue offering excessive shareholder distributions, namely a 4.4% dividend that will grow by 4% per year, and meaningful share repurchases. On the other hand, investors should be aware that the stock of BP is likely to come under pressure whenever the war in Ukraine comes to an end. Enbridge Enbridge is a midstream oil and gas company, which is headquartered in Canada and operates in four segments: Liquids Pipelines, Gas Transmission, Gas Distribution and Green Power. These segments generate 53%, 29%, 13% and 5%, respectively, of the total EBITDA of the company. Enbridge is an immense midstream company. Through its vast pipeline networks, the company transports approximately 25% of North America’s crude oil and 20% of the natural gas consumed in the U.S. It is also the largest distributor of natural gas in the U.S. by annual volumes. Most companies in the energy sector are highly cyclical due to the wild swings of the prices of oil and gas. This is not the case for Enbridge, which has one of the most resilient business models in the sector. Enbridge has a toll-like, fee-based model, which involves charging fees to customers for the products they transport through the pipeline networks of Enbridge. The contracts have minimum-volume requirements and hence Enbridge enjoys reliable cash flows even during downturns, when its customers transport lower volumes than usual. Enbridge greatly benefits from the aforementioned favorable prices of oil and gas. The company expects to grow its distributable cash flow per share by about 8% this year, from $3.91 to a new all-time high of $4.21. On the other hand, due to its defensive business model, Enbridge benefits less than most oil companies during boom times. Overall, Enbridge is one of the most resilient energy companies during downturns but it has less upside than most of its peers during boom times. Enbridge has grown its dividend (in CAD) for 27 consecutive years, at a 10% average annual rate. It is also offering an attractive 6.3% dividend yield. The company has a healthy payout ratio of 64% and is likely to continue growing its distributable cash flow thanks to a series of growth projects, which are related to the expansion of its network. Therefore, the stock is offering an above-average 6.3% dividend, which is likely to keep rising for many more years. ONEOK ONEOK engages in the gathering and processing of natural gas, it provides services in the business of natural gas liquids (NGLs) and owns natural gas pipelines (interstate and intrastate). ONEOK has a 40,000-mile network of NGLs and natural gas pipelines and provides midstream services to producers, processors and customers. Its assets are ideally positioned in the major shale basins, Permian and Bakken. More than 10% of the total U.S. natural gas production goes through the network of ONEOK. ONEOK has a volatile performance record but it has greatly improved its performance in the last four years thanks to the completion of a series of growth projects, such as pipelines and fractionation services in the Permian Basin, and the significant contribution of these projects to the cash flows of the company. ONEOK is currently offering a 6.1% dividend yield. The company had a high payout ratio in 2020 due to the impact of the pandemic on its business but it is on track to post record distributable cash flow per share this year thanks to the favorable commodity prices and the recovery of the U.S. gas production. As a result, ONEOK currently covers its dividend with a wide margin of safety, with a healthy payout ratio of 68%. It is also worth noting that a significant portion of the cash flows of ONEOK are fee-based or hedged. This means that ONEOK is more defensive during downturns than most energy companies. On the other hand, the business model of ONEOK is less resilient than the model of Enbridge. Final Thoughts The energy sector is by far the best-performing sector of the stock market this year, mostly thanks to the 13-year high prices of oil and gas, which have resulted from the sanctions of western countries on Russia. Despite the breathtaking rally of the energy sector, there are still energy stocks that offer markedly high dividend yields. The above three stocks offer exceptionally high yields with a wide margin of safety. Nevertheless, investors should be aware of the material downside risk of the entire energy sector whenever its next downcycle begins.

currency calculator

Komentarze rynkowe

JingRen
A Breakthrough! Japanese Yen (JPY) Helped By Data, Australian Dollar (AUD) Went Up Post Retail Sales Print
Jing Ren
KamilaSzypuła
ECB Will Continue To Hike Rates To Slow Inflation?
Kamila Szypuła
RebeccaDuthie
Euro To US Dollar Index Falls - Touching Levels Not Seen In 20 Years
Rebecca Duthie
KamilaSzypuła
Interest Rates Hiked. The Most Important Indicators Continue Their Downward Trend
Kamila Szypuła
RebeccaDuthie
Russia Suspends Flow Through The Nord Stream 1 Pipeline, Cotton Futures, Gold Prices Increase For The First Time In 3-weeks
Rebecca Duthie
AlexKuptsikevich
How Have BTC And ETH Performed Recently? Cryptocurrencies: Market Cap Increased Slightly, Telekom And Telefonica "Flirting" With Digital Assets
Alex Kuptsikevich
InstaForexAnalysis
This Week USD May Be Fluctuating! Euro To US Dollar - Technical Analysis And More - 10/10/22
InstaForex Analysis
INGEconomics
US Stocks: S&P 500 And Nasdaq Decreased Slightly Yesterday Losing 0.33% And 0.09% Respectively
ING Economics
AlexKuptsikevich
According to Bloomberg's survey Bitcoin may be trading between $17.6K and $25K
Alex Kuptsikevich
KamilaSzypuła
The Australian Dollar Failed To Hold Its Gains, The Pound Strengthened Against The US Dollar
Kamila Szypuła
KamilaSzypuła
BMW Was Fined 30,000 Pounds By CMA, Google Wants To Become More Productive
Kamila Szypuła
AlexKuptsikevich
Until FOMC meeting on December 14th, there could be no other catalyst for markets
Alex Kuptsikevich
AleksStrzesniewski
What’s more worrisome is the fact that we will continue to learn of all of the contagion and aftereffects of the FTX collapse in the coming weeks and months.
Aleks Strzesniewski
JingRen
Euro: 50bp rate hike is on the cards, but ECB decides shortly after Fed...
Jing Ren
AleksandrDavidov
Given the peculiarities of the US labor market and the high labor mobility, the acceptable unemployment rate is considered to be 5.0%
Aleksandr Davidov
AleksandrDavidov
From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level
Aleksandr Davidov
FranklinTempleton
According to Franklin Templeton global stocks' performance may be better than global bonds
Franklin Templeton
INGEconomics
Did you know that in October average gas price was 4.3 times higher than in 2019?
ING Economics
IpekOzkardeskaya
Fed Chair Powell bears in mind inflation prints, but they seem to be insufficient for FOMC
Ipek Ozkardeskaya
IntertraderMarket News
Tesla (TSLA) sank a further 2.58% after Goldman Sachs lowered its price target on the stock
Intertrader Market News
CraigErlam
European Central Bank is expected to go for a less hawkish hike, but economic projections may be worth even more attention
Craig Erlam
AlexKuptsikevich
Switzerland: National Bank goes for a 50bps rate hike. Swiss inflation slowdown is impressing
Alex Kuptsikevich
INGEconomics
Analysts expect ECB to deliver two 50bps hikes in the first quarter with a chance of one more in Q2
ING Economics
INGEconomics
Sterling to euro exchange rate is expected to hit 0.89 in the first quarter of 2023
ING Economics
Crypto.comAccelerate the...
There is a chance Apple may let users install apps from outside the App Store boosting NFT
Crypto.com Accelerate the...
CraigErlam
Craig Erlam talks euro against US dollar amid central banks decisions
Craig Erlam
IntertraderMarket News
Netflix (NFLX) slumped 8.63%, as a media report said the video streaming firm is refunding advertisers after missing views targets
Intertrader Market News
GecoOne
Geco.one COO says Bitcoin reaching $250K in 2023 is considered as impossible by other analysts as BTC does not exceed $60,000
Geco One
EnriqueDíaz-Álvarez
Bank of England decision wasn't unanimous as one member voted for a 75bp hike with two other opting for inaction
Enrique Díaz-Álvarez
INGEconomics
Indonesia is the world's 6th largest bauxite producer. Country bans commodity export from June 2023
ING Economics
InstaForexAnalysis
Gold supported by, among others, changes on Japanese bond market, may end the year trading at a 4-month high
InstaForex Analysis
DanielKostecki
China reopens, Texas freezes - crude oil has to face contrasting factors
Daniel Kostecki
IntertraderMarket News
European stocks closed mixed. The DAX 40 fell 0.50%, the CAC 40 declined 0.61%, while the FTSE 100 rose 0.32%
Intertrader Market News
IpekOzkardeskaya
China's reopening seems to be a double-edged sword as energy and commodities prices will go up
Ipek Ozkardeskaya
INGEconomics
Auto production and general machinery increased significantly. South Korea Industrial Production as a whole gained 0.4%
ING Economics