SPECIAL REPORT The Top 7 Stocks for 2024

3 Energy Stocks to Pick Up BEFORE the Year-End Rally

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  • These top energy stocks have effectively weathered the storm, offering robust upside ahead for investors
  • Chevron (CVX): Chevron’s robust dividend policy, marked by 36 years of growth and over 4.2% yield, combines with potential production expansion and strong cash flows.
  • Kinder Morgan (KMI): With its strategic LNG infrastructure and positive CEO outlook, Kinder Morgan promises long-term growth backed by a strong 6.5% dividend yield.
  • SLB (SLB): Poised for growth from increased drilling investments and a $100 billion Saudi drilling budget, SLB’s stable dividend yield and consistent payouts make it an attractive long-term bet.
top energy stocks - 3 Energy Stocks to Pick Up BEFORE the Year-End Rally

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The top energy stocks are poised for a promising future, despite the global economic slowdown. Moreover, while immediate gains in the energy sector may seem modest, there’s a powerful case for long-term growth.

Investors focused on income will find multiple energy stocks particularly appealing for their portfolios. Despite inconsistency in energy stocks this year, the long-term outlook remains incredibly optimistic. Additionally, as the need for energy transcends political and ideological boundaries, it becomes a necessity, pushing forward a diverse energy mix.

Kinder Morgan (KMI)

Kinder Morgan logo on a sign outside the company headquarters in Houston.
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Kinder Morgan (NYSE:KMI) stands out in the energy sphere with its powerful infrastructure, particularly the pipelines feeding into LNG export terminals. This setup is predominantly advantageous given the long-term global energy supply chain shifts due to ongoing geopolitical tensions and sanctions on Russia. Such a landscape offers the company a significant growth opportunity, enhancing its appeal as a savvy investment option.

Amidst market challenges, Kinder Morgan’s overall performance remains incredible. CEO Kimberly Allen Dang’s positive projection for 2024 signals a promising future, with the company’s financial strength bolstered by an impressive 6.5% dividend yield, marking six years of consecutive payout growth and a 102% payout ratio. With a remarkable 71% growth in levered free cash flow and a 15.4% increase in operating cash flow, Kinder Morgan showcases resilience and potential for sustained growth and investor rewards.

SLB (SLB)

slb stock
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SLB (NYSE:SLB), previously known as Schlumberger, has effectively rebranded as a global technology entity and hasn’t seen much movement in its stock this year. However, the company remains poised for long-term growth, benefiting from major players’ increasing their drilling and exploration investments, including Exxon Mobil (NYSE:XOM) and Chevron. Additionally, SLB’s revenues and earnings are likely to rise with Saudi Arabia’s announcement of a $100 billion drilling budget for 2023-2025.

Furthermore, the company recently delivered its third quarter earnings report, marked by a Non-GAAP EPS of 78 cents, slightly ahead of expectations. However, its revenue of $8.31 billion was marginally below forecasts. Nevertheless, Schlumberger’s position as a leading provider of fossil fuel production services and its attractive valuation place it in a favorable spot in the market. Furthermore, SLB’s commitment to shareholder returns is evident in its quarterly cash dividend of 25 cents per share and a stable dividend yield of 2%, continuing its history of consecutive dividend payments.

Chevron (CVX)

Chevron (CVX) sing with "diesel," "food mart" and "car wash" written underneath
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Chevron (NYSE:CVX) stands out in the energy sector, not just for its operational abilities but also for its commendable dividend policy, reflecting its resilience. Moreover, the company’s impressive forward dividend yield is over 4.2%, with an annual forward payout of $6.04, highlighting its strong commitment to shareholder returns. Impressively, Chevron has maintained a streak of 36 consecutive years of dividend growth as of the third quarter, underscoring its ability to generate steady profits even amidst industry volatility.

Looking ahead, Chevron is set for significant production expansion, with projections of more than one million barrels of oil equivalent per day by 2025. The company’s operating cash flow for the third quarter stood at a robust $9.7 billion, suggesting an annualized potential of $40 billion. The impending acquisition of Hess Corporation (NYSE:HES) is likely to enhance Chevron’s cash flows further, enabling it to pursue aggressive investments effectively and augment shareholder returns. The company’s investment-grade balance sheet and low break-even assets also paint a promising long-term cash flow sustainability picture.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.


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