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Integrated Stocks’ Dividend Yields Rise: Which Look Attractive?

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May. 28 2019, Published 3:08 p.m. ET

Integrated energy stocks’ dividend yields

Integrated energy stocks have fallen in the past year and the current quarter, boosting their dividend yields. Let’s evaluate six global integrated energy stocks’ dividend yields.

Royal Dutch Shell (RDS.A) has the highest dividend yield, followed by BP (BP) and Total (TOT). All three stocks have dividend yields above 5%. Chevron (CVX) has the lowest dividend yield. All of the stocks have raised their dividend payments in the past year but Shell, which has maintained steady dividend payments. The company has been returning wealth to shareholders through buybacks.

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Valuation and dividend yield positioning

These stocks’ average forward PE multiple is 12.4x. Usually, investors look for undervalued stocks with high dividend yields. Shell, BP, and Total all have below-average forward PE multiples.

Also, most integrated energy stocks’ earnings are expected to fall this year because of lower oil price estimates impacting their upstream earnings prospects. However, Shell’s, Total’s, and Suncor’s (SU) earnings are expected to rise by 10%, 7%, and 23%, respectively, this year.

Overall, Shell and Total look attractive, with higher dividend yields, lower valuation, and expected earnings growth. Contrarily, ExxonMobil (XOM) and Chevron have a higher valuation and lower yields, and their earnings are expected to fall 17% and 2%, respectively, this year. These stocks may command a higher valuation due to their financial strength.

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