3 Oil Stocks With High Dividend Yield: Ecopetrol SA (ADR) (EC), Energy Transfer Partners LP (ETP), And Williams Partners LP (WPZ)
At a time when the global oil price is trading near a 12-year low, the better way of focusing investments is the stocks that provide a solid dividend yield with a historical background. Ecopetrol SA (ADR) (NYSE:EC), Williams Partners LP (NYSE:WPZ) and Energy Transfer Partners LP (NYSE:ETP) are the three stocks that provide more than 10% yield for the dividend paid by it. Alternatively, investors would also look towards master limited partnerships for offering a better yield. The three companies mentioned here can be looked like an option to invest for enhanced dividend yield. The valuation of these stocks might still provide some opportunities for growth. Let’s look three companies separately to come to a conclusion whether it is fit to invest in these shares to reap better yield.
Ecopetrol SA (ADR) (NYSE:EC)
The company’s dividend appears to be providing the largest dividend yield to the investors. The key factor is that its stock price is available at around $6 though it reached a high of $19.9. It was one of the global gaining stocks as far as the dividend was concerned. The current price reflected the market conditions of the weak commodity prices. Though the commodity price will continue to face weakness at least in the first half of the current year, there is hope that the second six-month period might provide some solace to investors. Therefore, the current timing might be an appropriate one to invest for a dividend.
The truth is that by investing in Ecopetrol SA (ADR) (NYSE:EC), investors are nearly assured that they get a return of 17% from dividend alone within a year. The company pays a dividend of 33.86 cents a share for a quarter. On an annualized basis, this is translated into $1.04 a share. Though there was a fear that the oil price might drop further, there was also a sense of belief that most of the damages have been done in the oil sector until now. Therefore, the industry also appears to be ready to absorb any further weakness. In fact, such weaknesses were already reflected in the stock prices since the valuation of the stocks are lower than the benchmark Index.
The pressure of weak price has obviously made Ecopetrol SA (ADR) (NYSE:EC) to control the dividend payment. That was evident by the three-year average dividend growth rate which witnessed minus 34.8%. However, the five-year average dividend growth rate is healthy at 25.9%. At a current yield of 17%, the company’s dividend offered the biggest yield. Once the market improves, the stock price will witness an uptick, which would be an additional factor to gain. The stock provided a return on assets of 1.2%, return on equity of 3.10% and return on investments of 11.2%.
Williams Partners LP (NYSE:WPZ)
The next company to provide the highest dividend yield from the oil sector, which is facing rough weather, is Williams Partners LP (NYSE:WPZ). The stock is trading around $22 level though it reached a yearly high of $59.44. The stock is getting renewed interest from the investors for the primary reason that it would maintain its dividend rate in the first quarter. The company has been paying a dividend since 2005. Though the dividend yield of 16.4% was slightly lower than Ecopetrol SA (ADR) (NYSE:EC), the stock is a much safer bet for dividend purposes. There are few data to support the opinion.
For instance, it maintained the dividend rate of 85 cents a share and the dividend record date has been fixed February 5. That means the stock will turn ex-dividend from February 3. It will become payable by February 12. Therefore, it is the right time to buy the stock for a dividend. Williams Partners LP (NYSE:WPZ) has been boosting its dividend rate in the last five-year period. The company’s three-year average dividend growth rate was 30.8% while the five year average growth rate was 133.3%. Its price to cash flow and price to cash book was cheaper than S&P 500. However, its dividend yield is considerably higher than the benchmark index’s 2.3% and the industry average’s 8.1%. Though the risk associated with the oil cannot be removed, its core fundamentals appear to remain intact. Its distribution affirmation is another positive sign to hold the stock.
Energy Transfer Partners LP (NYSE:ETP)
This is the third biggest dividend yield provider to investors with 14.7% and also offered a return on investment of 6.10% while return on asset and equity were 0.3% and 1.3% respectively. Energy Transfer Partners LP (NYSE:ETP) was also one more stock that is valued less than the S&P 500 in terms of price to cash flow, price to book, and price to sales ratios. That was primarily because of the expected weakness in the commodity prices. It also suggested that the future loss has already been factored into the share price. However, that does not mean there are no downside risks, but that would be of limited extent. In a nutshell, significant downside risks are limited only.
Energy Transfer Partners LP (NYSE:ETP) has been paying a dividend since 1996 and boosts its dividend rate consecutively in the last three year period. Currently, the dividend is due for payment on February 16 as the record date is February 6. The company maintained its dividend rate of $1.055 a share for a quarter. That is translated into $4.16 a share on an annualized basis. Its five-year average dividend growth rate was 2.8% while the three-year average dividend rate was 4.7%. This is the right time to enter to get a dividend.
Ecopetrol SA (ADR) (NYSE:EC), Williams Partners LP (NYSE:WPZ), and Energy Transfer Partners LP (NYSE:ETP) are providing the highest dividend yield. The last two companies’ dividend is due soon. Therefore, the time is ripe to get the advantage of the dividend and increased yield. Once the market improves, the stock price will also improve from the current levels as valuation will turn to forward earnings rather than forward weakness.
Disclaimer: The opinions and data expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions. The author is not acting in an investment advisory capacity, nor is this an investment research report. The author’s opinions expressed herein address only select aspects of potential investment in securities of the company or companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies’ SEC filings, and consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice.
Latest posts by Viraj Shah (see all)
- Tesla Motors Inc (NASDAQ:TSLA)’s Elon Musk Is Going After Semi Truck Industry - November 17, 2017 04:37 AM PST
- Tesla Motors Inc (NASDAQ:TSLA) Is Not “Hotbed for Racist Behavior” - November 15, 2017 06:58 AM PST
- Nikola Tesla and Tesla Motors Inc (TSLA) – The Past & Future of the World You Cannot Ignore- Part 1 - May 15, 2017 05:11 AM PST