With volatile commodity prices, energy stocks can see wild swings from time to time. But investors don’t necessarily have to trade stocks to make money in the sector. You can also collect profits.
With the right dividend stocks, investors can bypass the stress and uncertainty that comes with trying to time the market, all while benefiting from a steady stream of income.
Business legend John D. Rockefeller once said, “You know the only thing that makes me happy? It’s to see my dividends come in.”
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But most companies don’t pay much these days. The average dividend yield for S&P 500 companies is now just 1.6 percent.
Still, some companies offer a more generous product. Take a look at two energy stocks that Wall Street analysts have found particularly attractive — both yield more than 8 percent.
Hess Midstream LP (NYSE:HESM)
Hess Midstream owns, operates and develops various midstream assets to provide services. Hess Corp. (NYSE: HES) and third party customers. Its oil, gas and produced water treatment assets are primarily located in the Three Forks shale play in the Bakken and Williston basins of North Dakota.
Hess Midstream’s business is supported by fee-based contracts that help reduce commodity price exposure.
In the year In the second quarter of 2023, the company paid a quarterly cash distribution of 60.11 cents per share, an increase of 2.7% from the first quarter’s distribution. At the current share price, the final payout translates to an 8.1% annual yield.
In its second quarter earnings report, the company said it generated $202.6 million in distributed cash flow (DCF), which was roughly 1.4 times its quarterly payout.
Going forward, management is targeting at least 5% annual distribution growth through 2025 while maintaining an annual distribution coverage of at least 1.4 times.
Goldman Sachs analyst John Mackay has a buy rating on Hess Midstream and a price target of $32, indicating an 8% upside.
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.
In July, Energy Transition announced a quarterly cash distribution of 31 cents. At the current price of the item, the amount comes out to an annual yield of 8.9%.
In the second quarter, Energy Transition’s distributable cash flow to its partners totaled $1.55 billion. In an earnings conference call, Energy Transfer Co. CEO Tom Long said the fund “resulted in excess cash flow after the distribution of $579 million.”
In the year The stock is up 19 percent by 2023, and Morgan Stanley analyst Robert Cade sees more bullishness on the horizon. The analyst has an overweight rating on Power Transmission and a price target of $17 — a 23 percent upside from where the stock currently sits.
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This column These 2 Energy Stocks Are Up More Than 8% – And Wall Street Looks Big Ahead It appeared at first Benzinga.com
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