The SPDR Select Sector Fund - Energy Select Sector XLE which offers exposure to the U.S. energy industry, including many of the world’s largest oil producers, is up over 60% year-to-date. Even though President Joe Biden has released over 180 million barrels of oil from the Strategic Petroleum Reserves (SPR), with 15 million more barrels set to be released, crude oil futures have continued to trend upward.
Meanwhile, Natural Gas futures have somewhat stabilized as much of the West, Midwest and Northeast are experiencing a warmer fall season than expected due to La Niña weather patterns, which can also cause drier-than-average years. Once winter takes hold and households start kicking on their furnaces, companies benefitting from exposure to natural gas could see their profits padded as natural gas prices rise due to higher demand.
With the Russia-Ukraine war showing no sign of easing, there is ongoing concern about energy issues in Europe, especially if it is a colder-than-average winter. In light of these geopolitical developments, here are three high-yielding energy stocks for investors to consider.
Pioneer Natural Resources Company PXD is offering a dividend yield of 9.81% or $25.44 per share annually, making quarterly payments, with a decent track record of increasing its dividends for four consecutive years. Pioneer Natural Resources is an independent oil and gas exploration and production company focusing on the Permian Basin in Texas, as oil and natural gas liquids represented 68% of production, as of 2021.
Piper Sandler upgraded its price target on Pioneer from $311 to $346 and retained an Overweight rating on the stock. Credit Suisse Group also maintained its Outperform rating, upgrading its price target from $285 to $300.
ONEOK Inc. OKE is offering a dividend yield of 6.31% or $3.74 per share annually, through quarterly payments, with an inconsistent track record of increasing its dividend payments. ONEOK is a midstream service provider and owns one of the nation’s premier natural gas liquids systems, connecting natural gas liquids supply in the Rocky Mountains, mid-continent and Permian regions with key market centers and an extensive network of natural gas gathering, processing, storage and transportation assets.
An analyst for Morgan Stanley currently has an Equal-Weight rating on ONEOK, with a price target of $70.
Meanwhile, Raymond James has an Outperform rating with a price target of $65 for ONEOK.
The Williams Companies Inc. WMB is offering a dividend yield of 5.17% or $1.70 per share annually, using quarterly payments, with a notable track record of increasing its dividends for four consecutive years. The Williams Companies is a midstream energy company that owns and operates the large Transco and Northwest pipeline systems and associated natural gas gathering, processing, and storage assets. Williams handles 30% of the natural gas in the United States.
Williams Companies has a rating of Equal-Weight and a price target of $38 from Morgan Stanley.
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