With the strong demand for oil and gas and tight supplies amid escalating geopolitical tensions and extended output cuts by OPEC+, the energy sector is thriving. Thus, investing in high-yield, fundamentally sound energy stocks Chevron Corporation (CVX) TotalEnergies SE (TTE), and BP p.l.c (BP) could be wise for steady returns.
In a monthly report, OPEC expects global oil demand to grow by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd next year. Robust energy demand, geopolitical tensions in the Middle East, OPEC+’s extended voluntary supply cuts into the second quarter, and Russian missile attacks on Ukraine are causing constant oil price hikes.
The U.S. Energy Information Administration (EIA) expects Brent crude oil spot price near $90 per barrel for the remainder of 2024. U.S. crude oil production is expected to increase to 13.2 million bpd in 2024 and 13.7 million bpd next year. And U.S. natural gas consumption is forecasted to average 89 Bcf/d.
The global oil and gas market is projected to reach $65.80 billion by 2032, exhibiting a CAGR of 15.8% during the forecast period (2024-2032). The market is driven by robust energy demand, geopolitical tensions, technological advancements, and shifting environmental policies, resulting in volatile prices and driving innovation and sustainability.
Besides, easy fault recognition using AI before failure, increased energy sector worker safety with AI-powered robots, and increased usage of microgrids are leading to the rapid adoption of AI in the energy market. The AI in the energy market is expected to grow at a CAGR of 29.9%, resulting in a volume of $55.38 billion by 2030.
Moreover, investors’ interest in energy stocks is evident from the iShares Global Energy ETF’s (IXC) 20.3% returns over the past year.
Given the industry’s robust outlook, investing in quality energy stocks such as CVX, TTE, and BP could be wise for future gains.
Chevron Corporation (CVX)
CVX engages in integrated energy and chemicals operations internationally. It operates through two segments: Upstream; and Downstream. The company is involved in the exploration, development, production, and transportation of crude oil and natural gas.
CVX pays an annual dividend of $6.52, which translates to a yield of 4.13% at the current share price. Its four-year average dividend yield is 4.37%. Additionally, the company’s dividend payouts have increased at a CAGR of 6.4% over the past three years. Notably, Chevron has raised its dividends for 36 consecutive years.
On April 25, CVX’s affiliate Tengizchevroil LLP commenced operations at its Wellhead Pressure Management Project (WPMP) at the Tengiz oil field in Kazakhstan. The WPMP is designed to maintain the existing processing plants’ full capacity of around 28 million tonnes per annum. This marks a significant step toward completing the Future Growth Project (FGP).
On April 4, CVX’s division Chevron New Energies (CNE) announced a lead investment in ION Clean Energy, a Boulder-based technology company that provides post-combustion point-source capture technology through its third-generation ICE-31 liquid amine system.
CNE will use ION’s ICE-31 technology to service customers with high volume and low concentration CO2 emissions. The investment also allows CNE to partner with ION customers on projects to scale the technology sooner.
CVX reported total revenues and other income of $48.72 billion during the first quarter that ended March 31, 2024, of which its sales and other operating revenues were $46.58 billion for the quarter. Its total earnings increased 143.5% from the prior quarter to $5.50 billion, of which its Upstream earnings rose 230.3% to $5.24 billion over the same period.
In addition, the company’s cash and cash equivalents and total assets stood at $6.28 billion and $261.65 billion as of March 31, 2024.
Analysts expect CVX’s revenue for the second quarter (ending June 2024) to increase 5.8% year-over-year to $51.73 billion. Its EPS for the current quarter is expected to grow 5.1% year-over-year to $3.24. Moreover, the company topped consensus EPS estimates in three of the trailing four quarters.
Shares of CVX have surged 8.9% over the past six months to close the last trading session at $157.75.
CVX’s POWR Ratings reflect this solid outlook. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CVX has a B grade for Momentum, Stability, and Quality. It is ranked #46 out of 80 stocks in the Energy – Oil & Gas industry.
In addition to the POWR Ratings we’ve stated above, we also have other ratings of CVX for Sentiment, Value, and Growth. Get all CVX ratings here.
TotalEnergies SE (TTE)
Headquartered in Courbevoie, France, TTE is a multi-energy company that produces and markets oil and biofuels, natural gas, green gases, renewables, and electricity internationally. The company operates in five segments: Exploration & Production; Integrated LNG; Integrated Power; Refining & Chemicals; and Marketing & Services.
TTE pays an annual dividend of $3.19, which translates to a yield of 4.46% at the prevailing share price. Its four-year average dividend yield is 6.41%.
On May 21, TTE announced the Final Investment Decision (FID) of the Kaminho project of developing the Cameia and Golfinho fields, located 100 km off the coast of Angola, by 1,700 m water-depth with its Block 20/11 partners, Petronas (40%) and Sonangol (20%).
The Kaminho project is the first large deepwater development in the Kwanza basin and will involve over 10 million man-hours in Angola. The production start-up is expected in 2028, with a plateau of 70,000 barrels of oil per day.
On May 8, TTE announced the successful first oil production on the Eldfisk North Project in the Greater Ekofisk Area in the North Sea. It is located in PL018, and the licensees are TotalEnergies EP Norge AS (39.9%), ConocoPhillips Skandinavia AS (35.1% - Operator), Vår Energi ASA (12.4%), Sval Energi AS (7.6%) and Petoro AS (5.0%).
The Eldfisk North project has unlocked additional resources and benefitted from using available capacities in the existing infrastructure in the Greater Elofisk Area, boding well with TTE’s portfolio.
During the first quarter that ended March 31, 2024, TTE posted revenue from sales of $51.88 billion. The company’s consolidated net income and EPS came in at $5.80 billion and $2.42, indicating growth of 3.1% and 8.5% from the year-ago value, respectively. Its net cash flow grew 43.6% year-over-year to $4.60 billion.
Street expects TTE’s EPS for the second quarter (ending June 2024) to increase 12.4% year-over-year to $2.24. For the fiscal year (ending December 2025), the company’s EPS is expected to grow 2.3% year-over-year to $9.21. Furthermore, the company surpassed the consensus revenue estimates in three of the trailing four quarters, which is impressive.
Over the past six months, TTE’s stock has gained 4% and 17.3% over the past year to close the last trading session at $71.52.
TTE’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Stability, Momentum, and Quality. Within the Energy – Oil & Gas industry, TTE is ranked #7 of 80 stocks.
Click here to access additional ratings of TTE for Sentiment, Growth, and Value.
BP p.l.c. (BP)
Based in London, United Kingdom, BP provides carbon products and services. The company operates in Gas & Low Carbon Energy; Oil Production & Operations; and Customers & Products segments. It engages in the production of natural gas and integrated gas and power, as well as gas trading.
BP pays an annual dividend of $1.74, which translates to a yield of 4.75% at the current share price. Its four-year average dividend yield is 5.58%. Moreover, the company’s dividend payouts have increased at a CAGR of 11.5% over the past three years.
On April 30, BP-owned company Archaea Energy announced the official startup of its largest original Archaea Modular Design (AMD) renewable natural gas (RNG) plant, located in Shawnee, Kansas. After purchasing Archaea Energy, BP became the largest producer of RNG in the US.
On April 16, BP announced the start-up of oil production from the new Azeri Central East (ACE) platform as part of the ACG field development in the Azerbaijan sector of the Caspian Sea. ACE platform is technologically and digitally the most advanced bp-operated offshore platform and aligns with BP’s strategy to invest in the energy system.
On March 20, BP opened its new electric-vehicle charging site at its BP America headquarters in Houston, Texas, and expanded its network of EV chargers. The new BP pulse station is the first BP pulse branded Gigahub™ in the U.S. This expands BP’s presence in the U.S. public EV-charging market and will help support faster electric-vehicle adoption nationwide.
For the first quarter that ended March 31, 2024, BP reported total revenues and other income of $49.96 billion. Profit for the period attributable to BP shareholders came in at $2.26 billion and $0.13 per share, respectively. Also, the company’s cash and cash equivalents and total assets were $31.51 billion and $275.43 billion as of March 31, 2024, respectively.
Analysts expect BP’s EPS for the second quarter (ending June 2024) to increase 24.9% year-over-year to $1.11, and its revenue for the ongoing quarter is expected to grow 4.7% year-over-year to $50.82 billion. For the fiscal year 2025, the company’s EPS is expected to increase 11.8% year-over-year to $5.10.
BP’s stock has surged 2.5% over the past six months and 1.9% over the past year to close the last trading session at $36.72.
BP’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
BP has a B grade for Momentum, Quality, and Growth. The stock is ranked #9 among 41 stocks in the A-rated Foreign – Oil & Gas industry.
To access BP’s other ratings for Sentiment, Value, and Stability, click here.
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CVX shares were unchanged in premarket trading Monday. Year-to-date, CVX has gained 7.99%, versus a 11.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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