Energy dividend stocks draw analyst support before quarterly results

Three dividend-paying energy stocks have received positive analyst calls ahead of quarterly earnings, with yields ranging from 3% at ConocoPhillips to 6.8% at Energy Transfer, according to CNBC and TipRanks. The commentary comes as equity markets contend with earnings reports, questions over the durability of artificial intelligence-related spending and geopolitical risk.

TipRanks, which ranks equity analysts based on past performance, highlighted recent buy ratings on ConocoPhillips, Energy Transfer and Chevron. Each company’s dividend or distribution depends on cash generation, capital spending and commodity-market conditions, making free cash flow and production guidance central to the analysts’ views.

ConocoPhillips

ConocoPhillips is due to report second-quarter results on Aug. 6. The oil and gas producer pays a dividend of 84 cents a share, or $3.36 on an annualized basis, giving the stock a 3% yield, according to TipRanks figures cited by CNBC.

Wells Fargo analyst Sam Margolin reaffirmed a buy rating on ConocoPhillips and set a $183 price target. He said the company and Shell looked attractive going into earnings despite pressure on crude prices from higher OPEC production quotas, citing operating visibility and resilience.

Margolin expects ConocoPhillips to reach the midpoint of its production guidance at 2.2 million barrels of oil equivalent a day. He also expects weaker Waha natural gas prices in the Permian Basin to be offset by firmer Brent crude premiums.

The analyst’s estimates include about $3.5 billion of free cash flow before working-capital movements and earnings per share of $2.94. He expects annualized capital expenditure to stay within the company’s earlier $12.2 billion guidance range and said spending on the North Field East project in Qatar should not see a material effect from disruption in the Strait of Hormuz.

Margolin, ranked No. 457 among more than 12,300 analysts tracked by TipRanks, has a 70% success rate and an average return of 13.3%, according to the platform.

Energy Transfer

Energy Transfer, a limited partnership with 140,000 miles of pipelines and related infrastructure, pays a quarterly cash distribution of 33.75 cents per common unit. That equals $1.35 a year and a 6.8% yield, according to TipRanks data cited by CNBC.

Jefferies analyst Julien Dumoulin-Smith maintained a buy rating and a $23 price target before Energy Transfer’s Aug. 4 second-quarter report. His adjusted EBITDA estimate of $4.46 billion is 1% below the Wall Street consensus of $4.49 billion.

Dumoulin-Smith said Energy Transfer has modestly outperformed Enterprise Products Partners recently, while still trading at a 19% relative discount to EPD. He said the shares could receive a higher market valuation if management gives more clarity on its long-term natural gas strategy.

The analyst expects Energy Transfer’s adjusted EBITDA to grow at a 4.8% compound annual rate from 2027 through 2030, above Wall Street expectations by 1 to 3 percentage points. He said additional natural gas projects could provide further upside.

Chevron

Chevron is scheduled to report second-quarter results on July 31. The company paid a $1.78 quarterly dividend last month, equivalent to $7.12 a year and a 3.92% yield, according to TipRanks data cited by CNBC.

Jefferies analyst Lloyd Byrne kept a buy rating on Chevron but cut his price target to $216 from $236. Byrne estimates adjusted earnings of about $5.86 a share, nearly 9% above Wall Street expectations.

Byrne said first-quarter upstream issues linked to the Tengizchevroil joint venture in Kazakhstan, Storm Fern downtime and Middle East conflict have largely eased. He expects second-quarter production of about 4,033 thousand barrels of oil equivalent per day and upstream adjusted earnings of about $8.1 billion.

For downstream operations, Byrne estimates adjusted earnings of about $4.4 billion, supported by higher crack spreads and refining performance in domestic and international markets. He also expects Chevron to generate $18.2 billion of operating cash flow before working-capital changes, helped by stronger earnings and about $2.2 billion of dividends from affiliated companies.

This story draws on original reporting from CNBC.