Oil prices have been on the rise lately, and many energy stocks have come back into focus.
But volatility can act as a double-edged sword, exposing both profitable opportunities to profits and huge losses. This requires investors to tread carefully and use well-thought-out strategies.
Some investors have chosen to focus on the dividend aspect of the business, collecting income from energy companies rather than actively trading the turbulent waves of the market.
Don’t miss it.
With the average dividend yield of S&P 500 companies at 1.5%, energy companies, many with higher-than-average yields, offer an opportunity for income-oriented investors.
Here’s a look at two high-yielding energy stocks that Wall Street finds attractive.
Sunoco LP (NYSE: SUN)
Sunoco is a key player in the U.S. wholesale motor fuels distribution, refined products transportation and storage and termination businesses.
Structured as a master limited partnership, Sunoco Motor Fuel distributes to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors in more than 40 states.
The partnership has a quarterly distribution of 84.2 cents, which translates to a generous annual yield of 7.3% at current unit prices.
In the year In the second quarter of 2023, Sunoco generated $175 million in distributable cash flow, covering 1.9 times its quarterly payout to shareholders.
The partnership’s current quarterly distribution is about 2% higher than a year ago. In the latest earnings conference call, management said they expect to review future distribution increases annually in the first quarter.
Sunoco’s stock is up 7% in 2023 and Mizuho analyst Gabriel Morin expects more gains going forward. The analyst has a buy rating and a $53 price target on Sunoco — a 14% upside from where the stock is currently.
Power Transmission LP (NYSE: ET )
Energy Transmission is one of the largest portfolios of energy resources in the US.
With approximately 125,000 miles of pipeline and associated energy infrastructure, the partnership has a strategic network spanning 41 states and major production basins in the country.
Energy Transfer is affiliated with Sunoco – owns general partner interests, incentive distribution rights and approximately 34% of Sunoco’s common shares.
In July, Energy Transition announced a quarterly cash distribution of 31 cents. At the current price of the item, the rate will rise to 9.1% of the annual production.
In the second quarter, Energy Transition’s distributable cash flow (DCF) to its partners totaled $1.55 billion. On an earnings conference call, Energy Transfer Co. CEO Tom Long said the fund “resulted in excess cash flow after distribution of $579 million.”
Morgan Stanley analyst Robert Cade is overweight on Power Transmission and has a price target of $17. Considering that the stock is selling at $13.57, the price target indicates a 25% upside.
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This column Analysts paying up to 9.1% like these 2 high-yielding energy stocks It appeared at first Benzinga.com
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