High Dividend Yielding Energy Sector Stocks for 2012: Top Picks with Price Targets

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Puzzled from ongoing volatility in the market and uncertainty looming on global economic front, investors need to focus on bottom fishing in long term themes. So, let’s take a look at individual plays in the energy sector, which is thriving on the back of escalated drilling activity in oil rich regions of United States. The valuations are attractive in this sector, so the downside risks may not be too much.

Although, it hard to convince nervy investors to take exposure in stocks, but making investments in some of these good quality energy sector stocks can reward you for waiting patiently through hefty dividends. No one can be sure where the prices will bottom out, so the only place where you should take daring bets should be high dividend yielding companies in sectors which look good for a bounce in an economic turnaround. Its safe to assume that energy stocks will benefit the most as the economy recovers, meanwhile enjoy some great dividend yields as a reward for riding through rough times.

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Chesapeake Energy (CHK)

This company enjoys being on the second spot among the largest producers of natural gas in US. We can call them crazy drillers as they are among the most aggressive drillers when it comes to new wells. The most exciting part of this business is that they are inclined towards improving their rank among oil and natural gas liquid producers. Making a switch to producing more liquids will be beneficial for this company as it will improve their margins as liquids enjoy better pricing than natural gas.

Financials

ConocoPhillips (COP)

This company has a well diversified business and enjoys the third rank among integrated energy players, with current operations in more than 30 countries. Its activities are widespread, ranging from exploration and production of petroleum and natural gas to related activities such as refining, transportation and supply, and production of plastics and chemicals.

Key takeaways for investors include a massive restructuring, and a stock split along with a reasonable dividend yield close to 4%.

Financials

Growth & Valuation

Ensco (ESV)

This London based company is a bit different play as it deals in offshore drilling services. The company has a good dividend yield of around 3 percent and carries out drilling activities in both oil and gas industry.

Financials

Growth & Valuation

EOG Resources (EOG)

If you are bullish on US oil discoveries, then EOG Resources is the best bet out there. This company is among the top oil producers in US, and on top of that it has substantial reserves in UK, China, Canada and Trinidad. This gets interesting as they are focused on high priced natural gas liquids and oil.

Financials

Growth & Valuation

Energy Transfer Partners (ETP)

Again, this one is a well diversified business with a wide portfolio of assets in the energy space. One of their key assets is 17,500 miles pipelines in Texas for natural gas supplies. Investors should consider this company for their widespread operation in different areas including Arizona, Louisiana, Arkansas, New Mexico and West Virginia to name a few.

Their propane assets are expected to fetch them a goodish $2.9 billion. Exiting from propane business could have a positive impact on their business as it has been underwater for quite some time.

On top of every other else this company pays a hefty dividend topping 8 percent, so that makes it a good buy amid current market scenario.

Financials