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BP: Ride The Recovery, And Collect A 7% Dividend

Published Sun, 10 Jul 2016 03:44:49 -0400 on Seeking Alpha

Energy companies were the worst performers in early 2016. With crude oil prices in free-fall, energy companies quickly became the most detested investments in the entire stock market. Big oil companies including Exxon Mobil (NYSE: XOM) and BP (NYSE: BP) expectedly reported weak 1st quarter earnings on the back of lower price realizations. More levered energy companies such as Chesapeake Energy (NYSE: CHK) were also under attack, crashing even more than the big, diversified multinationals. Other levered upstream companies didn't make it at all: Linn Energy (LINE), for instance, filed for bankruptcy, brought to its knees by its formidable debt burden.
As part of my strategy to deal with the correction in the energy sector, I moved into bigger oil names that have a much better chance of riding the downturn out, but that also pay a nice dividend to shareholders, which makes waiting for higher share prices so much sweeter. In particular, I gobbled up a few more shares of energy behemoth Exxon Mobil at the beginning of the year. In fact, I called Exxon Mobil a 3% yielding no-brainer in my last article due to the mountain of Free Cash Flow the company continues to pull in.
Investors that like to move up the risk-curve a little, however, and that also want a juicy dividend attached to the shares, may want to look at BP at this point.
BP has recovered nicely from the market crash earlier this year, and the company's shares have now advanced ~15 percent year-to-date. BP also... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CHESAPEAKE ENERGY 1.79   3.1 0.58 0.00 19.13
BP 37.67   14.3 2.64 2.44 6.45
EXXON MOBIL 71.98   17.3 4.15 3.48 4.83


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