Hi, I'm Jimmy in this video, I'm gonna walk through my top six dividend stocks from the
energy sector.
This video is part of our passive income from dividend series where our goal is to find
good dividend stocks from each of the eleven sectors that can give us the passive income
we need to get us closer to each of our personal goal of achieving financial independence.
There's a link in the description below to all the videos we've created so far in this
series.
OK, so to make this top dividend list, we created a few basic rules.
First, they must have a current dividend yield above 2 percent.
It was really easy in this particular sector.
Then they need a decent dividend, dividend coverage ratio and ideally they should be
able to grow their dividends.
Now there's lots of great dividend stocks from the energy sector.
So if you know any good ones that I didn't mention here, please put them in the description
below.
I'd be curious to see what everybody says.
Okay, so let's jump right in with our first U.S. division stock.
First up, we have Enterprise Product Partners, ticker symbol EPD.
EPD has a dividend yield of about six point one percent.
And when we look at the dividends per shares, well, we can see that they've been consistently
growing, which is exactly what we want from any of our dividend stocks.
And analysts are expecting for that growth to continue.
Analyst estimates of the green bars and when we add earnings per share, this chart, well,
we can see that earnings per share covered the dividends in 2018, but not so much in
the years leading up to that.
Now, this is an important point and really it's a theme amongst a lot of energy dividend
stocks.
And that's because a lot of energy dividend stocks get their profits from the price of
oil and natural gas.
So the tricky part of investing in oil and gas companies is that we tend to be victims
of the price of the underlying commodity.
And in 2018.
Well, that was broadly a decent year for the commodities and therefore for a lot of these
companies where that wasn't really true.
It's a year like 2017 or even 2016.
Okay.
So that's something keeping them back from mind.
Next up, we have the Royal Dutch Shell Company.
They come in from the London Exchange ticker symbol, RDSA right now.
Shell has a dividend yield of about six point four percent.
And when we look at their dividends alongside their earnings per share, well, we see a very
similar story, a strong twenty eighteen, but a bit weaker in the years leading up to it.
And meanwhile, they've been able to produce very solid dividends over the past few years.
Okay.
Next up, we have Exxon Mobil ticker symbol XOM Exxon Mobil has a dividend yield of almost
5 percent right now.
And when we look at their dividend and earnings per share, well, we can see once again a very
similar story that's going to happen in almost every one of these companies.
Now, the same is true for a close competitive Exxon, and that's Chevron ticker symbol CVX.
Chevron has a dividend yield of about 4 percent and their earnings and dividend history looks
very similar to the rest of the companies in the industry.
Now, Chevron is actually one of my favorite oil and gas companies because mostly because
of their efficiency, they're very efficient organization.
They tend to do well even when the rest of the industry struggles a bit.
Exxon is very similar in that matter.
So another thing that I think is a smart thing to do with these types of companies is to
combine a few of them into one position.
So in theory, if we have 10 companies in our portfolio, it will take one of those positions
and we combine a few of these that would help diversify us around a bit, but also give us
a decent amount of yield.
Now, if we wanted more yield, well, we could go back to London, to BP there on the London
Exchange, ticker symbol BP, and they have a dividend yield of about six point five percent.
And when we look at both earnings per share and dividend history, well, we can see once
again, it's a very similar story.
So as we could see, a lot of these companies act very similar to each other.
Now, one company that does look slightly better than the rest of them is total from the Paris
Exchange ticker symbol FP and we combine in the New York Stock Exchange under the ticker
symbol TOT to tell us a dividend yield of more than 5 percent.
When we look at their earnings per share versus their dividends, or we can see that profits
have consistently covered dividends over the past few years, despite the fact that total
saw saw an earnings decrease during the same years that the rest of the companies did.
This likely says more about the fact that Total has a more reasonable dividend payout
ratio.
Okay, now there's something I think we should keep in the back of our mind when it comes
to looking at oil and gas companies, depending on what we're after as far as dividend yield
goes, so we can break the oil and gas sector into three primary groups upstream.
That's where they drill for oil and gas.
Then there's midstream.
That's where they transport it and store it.
And then there's downstream.
That's where they refine it and ultimately sell it at things like gas stations.
Now, oftentimes, midstream companies can have a greater dividend yield.
They get some tax advantages, things along those lines.
And they're slightly they can be slightly less concerned with the price of oil and gas.
Since are looked at more as the toll booth collectors of the oil and gas industry, they
charge a fee to ship the oil, to transport the oil, to store the oil.
They don't really care how much the the exploration and production companies, how much they paid
for it, how much it cost them to drill it.
They're going to ship it for a fee.
So either way, they're gonna get that fee.
And this leads us to our bonus company, energy transfer ticker symbol ET.
They have a dividend yield of more than 9 percent.
And although profits still move around based on the volumes that they're receiving, they
have a seriously good dividend yield and they could be worth a closer look.
Now, if you're interested in a few more midstream ideas like this one.
Well, I did a video on some master limited partnerships that could be worth looking at.
There's a link right here and there's a link in the description below.
Besides that.
Thank you so much for sticking with me all the way through the video.
I really appreciate seeing the next video.
Thanks.