Best Energy Stock

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Best Energy Stock

If you’re into stocks for dividends, energy stocks would ordinarily be the last place you look for an income-friendly investment despite the fact that this sector has enough high yielders. The bulk of this is down to the fact that stocks in the energy sector are majorly dependent on energy prices, which in turn are dependent on the economic factors of supply and demand and the volatility of global politics and currency strength. But here we are, discussing what the best energy stock is in 2019! Why?

Renewed energy and resurgence in the energy sector

Well, it’s not hard to see. Despite the fact that weak oil prices including natural gas and other commodities often condemn energy stocks to gross underperformance, taking the 2014-2015 market as a case study, recoveries and performance at the moment, in 2019 appears very impressive. It makes sense, even for dividend investors to tap into this growth potential. With both prices and production on a steady increase, this period definitely offers a great opportunity for anyone contemplating an investment in the energy industry.

But then,

Which is the best energy stock to buy in 2019

While there are a handful of choice energy stocks that would be worth the buy at the moment, the stocks of Kinder Morgan (NYSE:KMI), Chevron (NYSE:CVX), and particularly, ExxonMobil (NYSE:XOM), appears to be the most appealing for some obvious reasons we’ll discuss in the parts below.

ExxonMobil

Oil prices continue to maintain a steady increase and for the likes of Exxon, this is the best of news. But then, there’s something about ExxonMobil that has made it look overwhelmingly positive to stock analysts. The oil and gas giant also just recently updated its growth plans.

For a P/E of 16.5, this looks rather cheap even when you’ve not even considered the 4.1% yield in dividends. With an impressive dividends payment streak of 36 years up till this moment, and earnings that continue to grow, XOM is still a bargain for any investor.

Kinder Morgan

The natural gas pipeline operator recently released its 2019 first-quarter earnings and three things were obvious. The company made enough money to reduce its debt and also return cash to its investors. Year on year cashflow saw a 10% growth, surpassing the company’s own expectations. Quarterly dividends also saw a 25% increase to $0.25 per share. KMI was also able to offset a $1.3 billion debt with the sale of its Canadian Trans Mountain pipeline.

Kinder Morgan literally finished the quarter a tad better than its own expectations. But then, market skepticism since it slashed dividends in 2015 had made all these not so appealing to the market. Prices have since fallen to $20.21 per share. While this may rattle shareholders, it definitely presents an opportunity for those who may be eyeing the stocks of this well-managed company.

Chevron

Chevron, together with ExxonMobil are the two largest players in the American energy scene. While ExxonMobil definitely appears to have an edge over Chevron both in the balance sheet and recent capital management history, CVX, at this moment is still a reasonable choice for anyone in the market for the best energy stock to buy.

Compared to Exxon, Chevron has seen more growth in recent times. And even in the low price environment of the energy sector, Chevron has been successful at delivering more free cash flow recently. At the moment, the oil giant is undergoing extensive operations expansions in its international operations. This will probably play into delivering more growth in cash flow in subsequent quarters. Again, this may be able to fund buybacks and significant dividend increases.

Bottom Line

Kinder Morgan seems to offer this huge potential for dividend growth investors with respect to expectations into the next year. Conservative investors will, however, likely find a better option in ExxonMobil or Chevron. Regardless, there is still the ever-important need to research properly and tread carefully. One thing, however, remains unchanged, the energy sector, at the moment holds great promise and all three of these stocks above can easily qualify as the best energy stock to buy right now.

Bill Kellerman

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