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Fossil fuels like petroleum will continue to play a key role in meeting global energy demand. At the same time, the world is now focusing on clean energy, gradually illuminating the prospects for renewable energy. Therefore, it seems prudent to allocate money to high dividend energy companies that pay money for renewable operations while maintaining a strong footprint in upstream operations.
Massive crude recovery
The price of West Texas Intermediate crude is trading above the $ 70 a barrel mark, signaling a substantial improvement from negative territory reached last April. The price of Brent crude, trading above $ 75 a barrel, has also skyrocketed from the low reached by the pandemic last year.
The rapid and widespread deployment of coronavirus vaccines has led to the massive upturn in crude. The positive trajectory of the oil price is certainly a boon for the exploration and production activities of energy players. With improving commodity prices, drilling activity around the world has grown at a steady pace.
The increase in drilling activity thanks to the recovery in crude prices is certainly good news for upstream companies. But energy investors should also consider the factor of energy transitions. Energy companies around the world are under constant pressure from investors and governments to reduce greenhouse gas emissions and align their targets with the Paris climate agreement.
Therefore, companies with an upstream commercial dominance and a strong focus on renewables are the best to bet on. Indeed, these companies are profiting from rising oil prices and also leading energy transitions to take advantage of the growing demand for clean energy.
Profitable dividend yield
So it’s pretty clear that energy companies in the oil and renewables sectors are now in the spotlight, as their long-term prospects look extremely bright. At the same time, it would be better if these companies also focus on returning capital to shareholders.
With the help of our proprietary equity filter, we targeted three energy companies that pay significantly higher dividend yields than the broader oil and energy sector of Zacks as well as the Zacks S&P 500 composite. three stocks have a Zacks rank 1 (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.
3 actions in the spotlight
A scenario of improving oil prices and an increase in daily oil equivalent production volumes help BP plcBP’s net income. BP added that the goal of adding net production of 900,000 barrels of oil equivalent per day by 2021 from key new upstream projects has already been successfully met.
BP is also at the forefront of the energy transition and has set itself the ambitious goal of becoming a net zero emissions company by 2050 or before.
BP has a strong focus on returning capital to shareholders. The integrated actor recently announced plans to make additional share buybacks for $ 1.25 billion before releasing its December quarter results. BP continues to forecast that it will repurchase $ 1 billion of shares each quarter, given the price of Brent crude at $ 60 a barrel.
On the dividend front, BP expects an annual dividend per common share increase of 4% through 2025. In addition, BP’s dividend yield of 4.7% is higher than the 3.9% yield of the Zacks sector. Oil – Energy and 1.2% of the yield of Zacks S&P 500 composites.
Eni SpA E has a global presence in the energy sector with a strong upstream presence. In Côte d’Ivoire, the energy major has made important oil and gas discoveries. Eni has also set itself an ambitious goal of fully decarbonizing its products and processes.
In its global operations, Eni makes more and more use of green energies. To accelerate the energy transition and promote renewable energies, Eni entered into a three-year partnership on September 30 with the International Renewable Energy Agency (IRENA).
Looking at the dividend history, it is clear that Eni’s 5.1% dividend yield is more attractive compared to Zacks ‘Oil – Energy sector and Zacks’ S&P 500 composite.
TotalEnergies SE TTE is not abandoning its traditional oil business to focus on energy transitions. TotalEnergies now has an ambitious plan to reduce the net carbon footprint of its operations to zero by 2050 or before.
If we look at the dividend history, TotalEnergies’ dividend yield of 4.5% is convincing. Given TotalEnergies’ five-year median dividend yield of 4.6%, investors are still largely rewarded. Thus, TTE shareholders are not only widely rewarded but also play a role in the energy transition.
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