It’s no surprise that the current malaise in crude oil and natural gas prices has wreaked havoc on the various energy stocks. As oil and natural gas prices have cratered, so have share prices for the entire sector.
And as they’ve fallen, many investors still looking for energy sector exposure have sought refuge in some of the biggest energy stocks.
After all, if an energy stock like Exxon (XOM) can’t get through the current issues alive, than no one can.
In the meantime, they are able to clip steady, relatively large dividend payments to hide mark time until the rebound occurs.
However, investors just focusing in America’s largest energy stocks could be doing their portfolios a disservice. There are plenty of major international energy stocks that have many of the same attributes of an Exxon or Chevron (CVX) and offer equally compelling dividend yields.
More importantly, many of these international energy producers are trading for even deeper discounts than their American rivals.
For investors looking for big dividends, values and stability, breaking out your passport and going overseas is a must for the energy sector. Here are three international energy stocks to buy today for big dividend yields.
International Energy Stocks to Buy for Big Yields: Total SA (TOT)
Dividend Yield: 6%
France’s Total SA (TOT) is often ignored and bypassed by investors looking for energy stocks — especially, those looking for perceived stability. Part of the reason is TOT’s history of taking on ambitious — read; expensive — projects to grow its oil reserves and production. For many investors, it was a “risky” bet among the energy majors.
However, there is nothing “risky” about TOT.
For starters, the firm is one of the largest integrated energy stocks on the planet. This includes assets that span the exploration/production, midstream and refining/marketing subsectors. Not to mention, its major stake in solar power superstar SunPower (SPWR). That means, TOT is able to make money in a variety of energy environments.
In fact, Total’s diversification has helped it limit losses during the recent oil price declines. Its refining operations have been able to feast on lower-cost Brent crude.
As for those perceived riskier assets, TOT has been selling them off and focusing on more sure things/lower cost of production plays. This has helped reduce its overall cost per barrel and increase its production margins.
All of this helps strengthen TOT’s cash flows and, more importantly, its 6% dividend yield. — a dividend that has continued to increase over the last five years and was still paid during the last oil price crash.
International Energy Stocks to Buy for Big Yields: Statoil ASA (STO)
Dividend Yield: 6.5%
Norway may be one of the smallest nations on the planet, but it certainly packs a punch. And majority of that punch — and the reason why its sovereign wealth fund is one of the richest in the world — comes from state-owned energy stock Statoil ASA (STO).
STO is responsible for more than 80% of Norway’s oil and gas production. Its assets span more than 30 nations and have been the sole producer in Norway’s rich and fertile North Sea for decades. In fact, Statoil basically pioneered the art of deepwater drilling. That gives it some of the lowest costs within that market segment. And it continues to drive more cost savings with the deepwater arena.
This includes launching a new project designed to extract more oil from its aging fields and by using unmanned oil platforms. While the project is initially expensive, over time it’ll help the firm save some big bucks. The project will reduce costs to under $40 per barrel when completed.
But STO isn’t just a one-trick deepwater pony. The firm recently was able to do an asset swap with Repsol (REPYY) to gain access to cheap crude oil production in the Eagle Ford. Again, the move is designed to help reduce its break-even point for production.
At the end of the day, these moves will help keep the cash flows humming along and pad the energy stock’s 6.5% dividend yield.
International Energy Stocks to Buy for Big Yields: Suncor Energy Inc. (SU)
Dividend Yield: 3.4%
Lower oil prices haven’t exactly been kind to Canada’s energy industry. Prices for Western Canadian Select (WCS) benchmark crude often trade at even bigger discounts to Brent than U.S. produced grades. This issue is then compounded by the fact that much of WCS production comes from the Alberta oil sands — which is extremely high cost.
This could help explain why shares of oil sands superstar Suncor Energy (SU) have sunk hard. However, investors may want to give SU and its ever-increasing 3.4% dividend yield a go.
In addition to being one of the lower cost producers in the oil sands, SU is one of its largest refiners. The firm is able to benefit from the lower cost per barrel of WCS and oil sands crude. That refining strength has helped it weather the storm quite nicely. Also helping is the firm’s fortress-like balance sheet and cash flows.
In fact, SU is so good during the recent downturn, it has gone on the offensive and has plowed head first into some hefty M&A — specifically targeting smaller rival Canadian Oil Sands (COSWF).
That deal — if it goes through — with help strengthen the firm’s huge asset base in Alberta, reduce costs even further and make it by far the dominant oil sands producer.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.