The oil patch is an investing area that can be as difficult to
sort out as a badly tangled fishing line.
You can endlessly ponder the why behind oil-price trends, or
you can cut the knot and start clean.
For investing, that means studying the fundamentals and the
price-and-volume action of the stocks.
For the income investor, four oil stocks show Composite
Ratings of 90 or better, aren't thin and pay a dividend above 1%.
Let's look in order of industry group strength.
U.S. explorers and producers were No. 35 of 197 industry
groups in Thursday's IBD.Chesapeake Energy (
) has a 95 Composite Rating and offers an annualized dividend
yield of 1.3%. The company's current strategy is to shift from a
natural-gas focus to a more balanced business. Natural gas
represents 75% to 80% of revenue.
The Street expects earnings to leap 167% this year.
Field services are No. 88.Oceaneering International (
) carries a 94 Composite Rating and a dividend yield of 1.1%.
Revenue is dependent on oil companies' capital spending for
deepwater exploration. Market researcher Douglas-Westwood expects
deepwater capital spending to double over the next five
The Street sees a 27% earnings pop this year.
Pipeline stocks are No. 132.EQT Midstream Partners (
), which has a 97 Composite Rating, is expected to grow EPS 43%
this year. The dividend yield is 3.3%.
Drillers are No. 136.Seadrill (
), an offshore deepwater contract driller, features a 90
Composite. The dividend yield is 7.9%.
Payouts vary. Last year's quarterly dividends were 80 cents a
share, 97 cents, 84 cents and $1.70. The $1.70 involved an
accelerated distribution due to taxes. In June, the quarterly
payout was 88 cents and in September (record date Sept. 9) the
payout will be 91 cents a share.