There’s little more than three months left in 2021. And time is rapidly running out for energy-light investors and their advisors to catch up to the sizzling performance of oil and gas stocks.
The S&P 500 Energy Index has returned better than 31 percent year to date, or nearly 12 percentage points more than the S&P 500 as a whole. And oil and gas stocks are even further ahead of the companies conventional wisdom says will replace them: The Invesco Solar ETF (NYSE: TAN) is underwater by -18 percent year-to-date, while the ARK Innovation ETF (NYSE: ARKK) is lower by more than -5 percent.
Too many small owners lacking critical scale and unprecedented roadblocks to new energy pipeline infrastructure: That’s what was at the core of the unprecedented wave of US oil and gas midstream dividend cuts and bankruptcies of the past few years. Now those same forces are spawning something considerably more positive for investors
There may come a day when US transportation is 100 percent electrified and homes are heated with blended hydrogen. But in the here and now, oil and gas pipelines are essential infrastructure. Exhibit A is the havoc wreaked by the successful hack of systems at the Colonial Pipeline this month.
Even without a repeat of the company’s Q1 windfall, the benefits to Kinder Morgan Inc.’s (NYSE: KMI) underlying business and balance sheet are likely to continue flowing throughout the rest of 2021 and beyond.
Shale exploration and production (E&P) giant, Pioneer Natural Resources (NYSE: PXD) announced a deal to acquire privately-held DoublePoint Energy, but the reception on Wall Street has been less than enthusiastic.
Single digit temperatures, record snowfall, millions of utility customers without service, nearly one-third of the state’s power generating capacity shut down and spiking electricity prices: That’s the damage so far from the Great Texas Power Crisis of 2021, which continues wreak havoc across the Lone Star State.
Next month marks the 15-year anniversary of the so-called “Halloween Massacre”—when Canada’s then Prime Minister Stephen Harper reversed a pledge not to tax income trusts, and brought the investment boom to an abrupt end.
There have been no dividend cuts since the previous issue of EIA, leaving the year-to-date total at nine. We are, however, making several changes to the Endangered Dividends List to reflect the impact of Q2 earnings, guidance updates and market developments.
“Rock Bottom Prices Ready to Rise”: That was the headline of our December 31, 2020 issue. And we followed it up with “Energy: Ready, Set, Buy!” for what posted on January 18, 2021. That advice has turned out quite well for readers who followed our advice to buy stocks of best in class energy companies.
Here’s our post-Q2 earnings macro analysis, with a focus on what results and guidance say for returns on our recommended stocks for the rest of the year and beyond.
Since the previous issue of EIA, two coverage universe companies have announced dividend cuts. That brings the total number this year to nine, a small fraction of last year’s reductions but also a clear demonstration there’s still danger to dividends at this stage of the cycle.
Elliott and Roger on Aug. 31, 2021
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