The Silicon Valley Bank implosion had a huge effect on almost every stock in the financial sector, and the worries spilled over to other sectors as well. Those worries led to a big pullback in oil prices, as panicked traders sold oil futures and asked questions later. However, after a strong week last week, and a jump higher of 5% on Monday, many are speculating that the black gold could be set for a big run higher over the coming months.
While some of the most bullish banks have cut their oil price target for this year, a run higher could still happen, very possibly to the low to mid $90s by summer. Given the current spot price for Brent and West Texas Intermediate at $78.62 and $73.60, respectively, on Tuesday, hitting any levels $15 to $20 per barrel higher would be huge for investors.
One savvy investor who took advantage of the financial issues and the tumbling oil price was Warren Buffett. In early March, the famed investors added an additional 5.8 million shares of Occidental Petroleum at prices ranging between $59.85 to $61.90. He bought 8 million more between March 23 and March 27. It was reported Tuesday that he added an additional 3.7 million shares this week. The Oracle of Omaha now owns a stunning 211 million shares, which is about a 23.5% stake in the company.
We screened our 24/7 Wall St. energy research database looking for stocks with the highest dividends and those rated Buy across Wall Street. Five top stocks made the cut, and all look like tempting buys now for investors looking to add or increase energy exposure. Note that four of these exploration and production energy leaders use a variable dividend strategy based on production and oil pricing, so current yields may be higher or lower as the year goes on. Yet, even if some come in lower, they should still be outstanding.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Coterra Energy
This company was formed by the closing of the $17 billion merger of Cabot Oil & Gas and Cimarex Energy in 2021. Coterra Energy Inc. (NASDAQ: CTRA) is an independent oil and gas company engaged in the development, exploration and production of oil, natural gas and natural gas liquids (NGLs) in the United States. It primarily focuses on the Marcellus Shale, with approximately 177,000 net acres in the dry gas window of the play located in Susquehanna County, Pennsylvania.
The company also holds Permian Basin properties with approximately 306,000 net acres and Anadarko Basin properties located in Oklahoma with approximately 182,000 net acres. In addition, it operates natural gas and saltwater disposal gathering systems in Texas. The company sells its natural gas to industrial customers, local distribution companies, oil and gas marketers, major energy companies, pipeline companies and power-generation facilities.
Shareholders receive an 8.63% variable dividend. Goldman Sachs has a $30 target price on Coterra Energy stock. The consensus target is $30.38, and the shares closed on Tuesday at $23.98.
Devon Energy
This may be one of the best value propositions in the sector, and it was one of the first to utilize a variable dividend strategy. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and NGLs in the United States and Canada.
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