Endangered Dividends List
Eight companies in our coverage universe have announced distribution cuts since the previous issue of EIA. We expect to see at least a like number by the time the next issue goes to post, as more management teams adjust guidance to sub-$30 per barrel oil. And we’ve accordingly added to the table, which now lists 39 companies from our coverage universes.
Portfolio: Another Look at Energy Bonds
In the March 25 Energy Commentary “Energy Bonds are Ripe Again,” we highlighted an emerging fixed income opportunity in bonds of battered energy companies up and down the value chain.
Energy Bonds Are Ripe Again
Nothing incites investor panic like a fast-falling safe haven. But the Federal Reserve’s Monday announcement abruptly calmed what had been a growing rout in corporate as well as municipal debt. What’s left now is a massive supply of bonds with the highest yields since 2008.
Endangered Dividends List
Many companies have cut dividends since the previous issue of EIA. The sharp drop in the price of Western Canada Select (WCS) oil was the primary catalyst for cuts at ARC, Bonterra, Crescent Point, Vermilion and Whitecap.
What’s Going On With Midstream?
Saudi Arabia’s decision last weekend to crank up production was the last straw for oil prices, already depressed by demand concerns resulting from global reaction to the spread of COVID-19.
Our Best Foot Forward in a Shaky Market
When global markets shake, not much does well. That’s certainly been the case the past several weeks, as worries about the potential economic impact of COVID-19 have spread.
Energy stocks were just beginning a recovery earlier this year when Chinese authorities first indicated an elevated threat to public health. What’s happened since is a full-on retreat in major sector indexes, with both the Alerian MLP Index and S&P 500 Energy Sector Index taking out the lows of early 2016.
That’s extraordinary for the fact alone that benchmark oil prices are still more than $20 above their February 2016 low point of $26 per barrel and change. Even North American benchmark natural gas is trading 8 percent higher than its March 2016 nadir of $1.61 per thousand cubic foot.
Six Picks
Some investors may raise an eyebrow at this recommendation, as well as our risk rating of the midstream MLP as “Conservative.” And Energy Transfer hasn’t held up well in the COVID-19-inspired energy sector selloff either, with the share price closing in on its lowest point in four years and the yield a distressed-looking 11 percent plus.
Endangered Dividends List
Not all EIA coverage universe companies have released their Q4 results and updated guidance. That’s largely because of the greater detail required to make annual as opposed to quarterly filings.
Q4 Verdict: Our Midstream Distributions are Safe and Worth Buying
Q4 results have three clear takeaways: The midstream sector stress test is well underway; best-in-class midstream companies have made needed adjustments; and no love from investors has created a major opportunity to lock in extremely high, sustainable yields.
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Live Chat with
Elliott and Roger on Mar. 31, 2020
Portfolios & Ratings
Model Portfolios
Balanced portfolios of energy stocks for aggressive and conservative investors.
Producers and Drillers
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
MLPs and Midstream
Our assessment of every energy-related master limited partnership.
International Coverage
Roger Conrad’s coverage of more than 70 dividend-paying energy names.
Experts
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Elliott H. Gue
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor
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Roger S. Conrad
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor