BofA Securities Says Buy Energy Despite Executive Orders: 5 Dividend Winners
One would think that President Biden’s initiatives on climate change would be the worst possible scenario for the energy sector. He stopped construction on the Keystone XL pipeline and rejoined the Paris Climate Agreement via executive orders, putting a shudder through energy investors. The reality, according to the BofA Securities team, is that politics often takes a backseat to supply/demand dynamics. With the potential for a reopening of the economy, energy stocks could actually benefit big time, and the firm is overweighting the sector.
In a new report, the team presents the fact that during President Obama’s administration, which was far more environmentally focused than President Trump’s, the energy sector actually outperformed by more than 15% compared with the results during Trump’s time in office. Given the potential for the economy to improve with the COVID-19 vaccines and continued tailwinds from very loose monetary policy and low interest rates, buying some of the top energy dividend-paying stocks now may be an outstanding contrarian idea.
Five stocks rated Buy at BofA Securities pay solid dividends and are attractively priced. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Chevron
This energy giant is a safer way for investors looking to be positioned in its sector, and it is the top energy sector pick for 2021 at BofA Securities. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company, with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals. The company sports a sizable dividend and has a solid place in the sector when it comes to natural gas and liquefied natural gas.
Back in December, the company gave some solid 2021 guidance, and the analyst noted this at the time:
Chevron provided guidance around capital expenditures through 2025. On a headline basis, the company expects to spend $14 billion in 2021 ($9.7 billion in cash capital expenditures), and $14-$16 billion annually in 2022-2025 relative to Chevron’s prior out year guidance of $19-22 billion, which excluded the Noble transaction. The company remains focused on investments in the Permian, other unconventionals, and the Gulf of Mexico.
Currently, shareholders receive a hefty 5.85% dividend, which the analysts feel comfortable will remain at current levels. The BofA Securities price target for the shares is $116, while the Wall Street consensus target is down at $103.98. The last Chevron stock trade on Wednesday was reported at $88.20.
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