Feature Article

Q2 earnings season is upon us with the first Portfolio reporters already in the books. That means it’s time to lay out what we’re looking for in companies’ numbers and guidance to answer the following: Do underlying businesses of our recommended companies demonstrate sufficient strength to merit fresh money buys, or should we move on to something with a better risk/reward?

Shell Midstream Partners LP (NYSE: SHLX) is the seventh company in our Energy and Income Advisor coverage universe to cut its dividend in calendar 2021. The company announced a quarterly payout of 30 cents per share for payment August 13, a reduction of -34.8 percent from the previous level of 46 cents.

Stocks featured in this article: Kinder Morgan Inc (NYSE: KMI), Schlumberger Ltd (NYSE: SLB) and Texas Instruments (NYSE: TXN). Three Portfolio companies have released their results and updated guidance so far during Q2 earnings reporting season. Here’s a brief look at the details for this trio. See the Feature article for more on what we’re looking for with the stocks in our coverage universe.

In the final issue of Energy & Income Advisor for 2020, “Rock Bottom Prices Ready to Rise,” we outlined a constructive view for crude oil prices based on three primary drivers: The ongoing recovery in global demand, OPEC+ willingness to maintain historic production cuts and US shale producer discipline.

Over the next month and a half, all our Model Portfolio and High Yield Energy List members are slated to report Q2 2021 earnings estimates.

Bids and counterbids: Pembina Pipeline’s (TSX: PPL, NYSE: PBA) offer to swap 0.5 of its shares for each share of fellow Canadian midstream company Inter Pipeline Ltd (TSX: IPL, OTC: IPPLF) has provoked a new effort from rival bidder Brookfield Infrastructure Partners (TSX: BIP-U, NYSE: BIP).

Clearly we could have picked a better time to launch our High Yield Energy List than late May 2019—on the eve of a pandemic that briefly sent oil prices below zero, forced dramatic cutbacks in shale output and triggered an historic number of sector dividend cuts.

Our outlook remains bullish for energy prices and sector stocks. That means we expect the number of names on the Endangered Dividends List to decrease further in 2021. And we believe odds favor most of the remaining 12 companies still on the EDL will avoid cuts when they declare their next payouts in July and August.