Maitali Ramkumar

1/15/2020 The Best Dividend-Yielding Energy Stocks for 2020 - Market Realist The Best Dividend-Yielding Energy Stocks for 2020 By Maitali Ramkumar Dec 31, 2019 Energy stocks have risen marginally in 2019. Though these stocks have underperformed the market, their dividend yields have outperformed it. In the year, while BP (BP) has fallen marginally, ExxonMobil (XOM), Chevron (CVX), and Royal Dutch Shell (RDS.A) have risen. In comparison, equity markets have touched record highs. Energy stocks’ performances and dividend yields ExxonMobil, Shell, and Chevron stocks have risen 1.9%, 0.7%, and 10.2%, respectively, YTD (yearto-date). However, BP stock has fallen 0.8% in the year. In comparison, the S&P 500 Index (SPY) and the Dow Jones Industrial Average (DIA) have risen 28.5% and 22.0%, respectively, YTD. However, when it comes to dividend yields, energy stocks have outperformed the markets. SPY’s and DIA’s dividend yields stand at 1.7% and 2.1%, respectively. In comparison, BP’s and Shell’s yields stand at 6.5% and 6.4%, and ExxonMobil’s and Chevron’s yields stand at 5.0% and 4.0%, respectively. So, energy stock yields are much higher than market yields. Let’s look at how these stocks are positioned heading into 2020. BP: The highest dividend-yielding energy stock BP is the highest dividend-yielding energy stock. Though the stock has fallen marginally in the year, its crude oil and natural gas production have risen. BP stock has declined as the company’s earnings have been hit by lower oil prices, resulting in weaker upstream realizations and earnings. However, the silver lining was BP’s better hydrocarbon production. In the rst nine months of 2019, BP’s oil and gas output rose by 4.2% YoY to 2.6 MMboepd (million barrels of oil equivalent per day). Wall Street analysts expect BP’s earnings to rise by 14% in 2020. The rise is quite possible with better oil prices and higher hydrocarbon output. Besides, BP has a series of upstream projects under development. By 2021, the company expects 0.9 MMboepd of net new production from its main upstream projects. To learn more, read BP Could Bene t from Recovering Oil Prices in 2020. BP stock is trading at a 2020 forward PE of 11.2x, lower than the peer average of 14.4x. So, BP stock seems well placed with the highest dividend yield, positive earnings growth, and a low valuation. Shell has the second-best dividend yield Shell stock has risen marginally in 2019. Though Shell saw a marginal improvement in its hydrocarbon output, it has a robust pipeline of projects. In the rst nine months, Shell’s oil and gas production rose by 0.2% YoY to 3.6 MMboepd. The company expects 0.25 MMboepd of new output from projects that will begin in-. Plus, Shell expects 0.30 MMboepd of additional production from the projects that will start up in 2021 and beyond. Wall Street analysts expect Shell’s EPS to rise 21% in 2020. Shell stock is trading at a 2020 forward PE of 10.7x, below the peer average. To learn more, read Is Shell Better Placed than Its Peers for 2020? ExxonMobil’s dividend yield touches 5% ExxonMobil has also seen a decline in its earnings in 2019. However, in the next year, analysts expect the company to bene t from better oil prices and re ning conditions. In 2020, analysts expect oil prices to rise marginally. This should support the company’s earnings. Plus, better re ning cracks and oil spreads should help the company’s downstream pro ts. In the rst nine months, the company’s production rose by 4.1% YoY to 3.9 MMboepd. In 2020, ExxonMobil could see higher production driven by growth in the Permian Basin. In 2020, Wall Street analysts expect the company’s earnings to rise by 42%, the highest among its peers. XOM is trading at a forward PE of 18.4x, the highest among its peers. https://marketrealist.com/2019/12/best-dividend-yielding-energy-stocks-2020/ 1/4 1/15/2020 The Best Dividend-Yielding Energy Stocks for 2020 - Market Realist To learn more, read ExxonMobil or Chevron: Which Is the Oil Stock for 2020? Chevron has the lowest dividend yield Despite Chevron’s lowest dividend yield of 4.0%, its yield stands higher than the market’s. Chevron is the strongest oil company and cash nancially despite having faced numerous oil cycles. It had the best debt ow position in the rst nine months of 2019. Further, the company saw record upstream production in the year. Chevron’s production rose by 6.0% YoY to 3.1 MMboepd in the rst nine months. However, now, Chevron is preparing for long-term lower energy prices. The company is high-grading its portfolio by investing in high-return projects and divesting noncore projects. Chevron’s hydrocarbon output growth rate could soften in the next year due to its high production base in 2019. It’s no surprise that analysts expect the lowest earnings growth for Chevron. They expect the company’s EPS to rise 8% YoY in 2020. Chevron stock is trading at a 2020 forward PE of 17.4x, higher than the average. To learn more about Chevron stock, read Why Analysts Are Divided on Chevron Stock. Overall Energy stocks have borne the brunt of weaker oil prices in 2019. However, in the next year, oil prices could rise, supporting oil companies’ earnings. Plus, the growth in their oil and gas production could boost their pro ts. Further, re ning conditions are strengthening in anticipation of IMO 2020. Wall Street analysts expect oil companies’ earnings to rise, on average, by 21% in 2020. These highdividend-yielding energy stocks seem well placed to greet the next year with a bang. TAGS bp Exxon stock BP dividend yield ExxonMobil BP stock Chevron Chevron dividend yield ExxonMobil dividend yield oil companies Chevron stock oil stocks shell dividend yield Shell dividend yield Exxon Mobil Shell stock Why Wall Street Revised HEXO’s 2020 Estimates By Margaret Patrick Dec 31, 2019 On December 30, Hexo’s (HEXO) share price fell 4.38% to $1.53 on the NYSE. The stock also fell 4.76% to 2.0 Canadian dollars on the TSE. Most cannabis stocks, including Hexo, haven’t bene tted from the Santa Claus rally in 2019. Hexo stock is down 55.39% year-to-date on the NYSE and 61.61% on the TSE. The company’s shares fell 81.79% from its 52-week high of $8.40 on the NYSE, and the stock is just 3.38% above its 52week low price of $1.48. Also, HEXO fell by 82.28% from its 52-week high of 11.29 Canadian dollars on the TSE. And on December 30, Hexo stock closed at a 52-week low of 2.0 Canadian dollars on the TSE. Hexo shares have nosedived since the company announced a registered direct share o ering of raising $25 million on December 26. The company o ered around 15 million shares at $1.67 per share. As BNN Bloomberg reported, investors were spooked because the o er price was a 14.79% discount to Hexo’s closing price of $1.96 on December 24. Since November 29, the stock has fallen 29.17% on the NYSE and 30.07% on the TSE. How analysts are rating Hexo on the TSE A total of 15 analysts are covering Hexo stock on the TSE as of December 31, 2019. The number of analysts covering the company rst rose from 10 in December 2018 to 15 in July 2019. In October 2019, 16 analysts covered the company, but the number dropped to 15 in November 2019. Analyst and investor sentiment for Hexo has taken a hit since November 2019. The majority of analysts rated the stock a “hold” in November and December 2019. Previously, most analysts had rated the stock a “buy” in December 2018, July 2019, and October 2019. https://marketrealist.com/2019/12/best-dividend-yielding-energy-stocks-2020/ 2/4 1/15/2020 The Best Dividend-Yielding Energy Stocks for 2020 - Market Realist In December 2019, three analysts are rating the company a “buy,” six a “hold,” ve a “sell,” and one a “strong sell.” The overall analyst sentiment seems to have signi cantly deteriorated compared to November. In November, three analysts rated the company a “buy,” eight a “hold,” three a “sell,” and one a “strong sell.” Wall Street has given the stock a target price of 2.79 Canadian dollars, implying upside potential of 39.50% compared to its last closing price. The target price rst increased from 8.95 Canadian dollars in December 2018 to 10.37 in July 2019. It further increased to 10.40 in October. But then it tumbled to 4.02 dollars in November. How analysts are rating the stock on the NYSE A total of four analysts are covering Hexo on NYSE as of December 31, 2019. The number of analysts covering the company rose from two in July and October 2019 to three in November 2019. All analysts covering the stock had rated it a “buy” in July 2019 and October 2019. Now, most analysts rate the company a “hold.” In December 2019, one analyst is rating the stock as a “buy” while three rate it as a “hold.” In November, three analysts rated the company a “hold.” Analysts have given the stock a target price of $2.75, implying upside potential of 79.74% compared to its last closing price. They also slashed the target price of $9.0 in July and October 2019 to $2.70 in November 2019. Hexo’s Quebec stronghold may no longer be the differentiating factor As BNN Bloomberg also reported, Hexo’s stronghold in Quebec had been pivotal in controlling the downfall of its shares compared to other cannabis players. However, the province may no longer be a competitive advantage for the company. Lately, Quebec has intensi ed its regulatory scrutiny of cannabis products. On November 20, as Mondaq reported, the Quebec government increased the minimum age for cannabis consumption to 21, e ective January 1, 2020. This age limit is more stringent than in other provinces in Canada. Quebec had also attempted to stop individuals from growing cannabis plants at home. And while the court ruled this restriction to be unconstitutional, the province has succeeded in enforcing strict regulations on the sale of cannabis-infused edibles. On November 21, as Marijuana Business Daily reported, Quebec banned the sale of vaping products as part of a cannabis 2.0 launch. The province took this step in the wake of the vaping crisis. As BNN Bloomberg also reported, Cantor Fitzgerald considers Hexo’s over-exposure to the Quebec market to be a major risk. The company earns almost 70% of its sales from this province. So it may not bene t signi cantly from the Cannabis 2.0 launch in Quebec. The province has banned many Cannabis 2.0 products. How analysts’ revenue estimates have changed for Hexo stock Analysts rst increased Hexo’s 2018 to 329 in July 2019. The scal 2020 revenue estimates from 234 Canadian dollars in December scal 2020 revenue estimate slightly reduced to 328 million in October 2019. Analysts then slashed their revenue estimate to 114 million in November. They now expect Hexo’s scal 2020 revenues at 80 million. In December 2019, analysts have also signi cantly reduced the company’s revenue estimates. In December 2018, they had projected the company’s scal 2021 and scal 2022 scal 2021 revenues to be 346 million Canadian dollars. This estimate increased to 505 million in July 2019 and to 517 million in October 2019. Analysts, however, reduced Hexo’s scal 2021 revenue estimate to 235 million in November. In December, they’ve projected the company’s Wall Street now expects Hexo’s scal 2021 revenues at 169 million. scal 2022 revenues at 230 million Canadian dollars. And analysts have almost halved their revenue estimate from 401 million in December 2018. In the interim, they had raised Hexo’s scal 2022 revenue estimate to 716 million in July and October. However, they slashed this revenue estimate to 238 million in November. How analysts’ EBITDA estimates have changed for Hexo In December 2018, analysts had expected Hexo to become EBITDA-positive in estimated adjusted the company’s 2018. Wall Street scal 2020. They had scal 2020 EBITDA at 82 million Canadian dollars in December rst reduced its EBITDA estimate to 57 million in July 2019 and 46 million in October 2019. The overall analyst sentiment for the company took a turn for the worst in November. Analysts projected Hexo’s scal 2020 EBITDA at -39 million Canadian dollars. They now expect even worse EBITDA of -56 million in scal 2020. In December 2018, analysts had also estimated Hexo’s Canadian dollars. They scal 2021 adjusted EBITDA at 113 million rst increased this estimate to 116 million Canadian dollars in July 2019. But they then reduced it to 107 million in October. Analysts also slashed their https://marketrealist.com/2019/12/best-dividend-yielding-energy-stocks-2020/ scal 2021 adjusted 3/4 1/15/2020 The Best Dividend-Yielding Energy Stocks for 2020 - Market Realist EBITDA estimate to 13 million in November 2019. And in December 2019, analysts expect Hexo to break even with its EBITDA level in scal 2021. Analysts also expect Hexo to become EBITDA-positive in scal 2022. They have, however, dramatically reduced their scal 2022 adjusted EBITDA estimate since December 2018. Previously, they had estimated Hexo’s scal 2022 EBITDA at 79 million Canadian dollars in December 2018. Analyst revised this estimate upwards to 178 million in July 2019 and then to 209 million in October. Wall Street, however, slashed its scal 2022 EBITDA estimate to 41 million in November and then to 36 million in December. TAGS analysts estimates for HEXO cannabis stocks marijuana stocks About analysts ratings for HEXO HEXO 2020 guidance Contact Us Cannabis Cannabis 2.0 HEXO adjusted EBITDA Cookie Policy cannabis sector cannabis stocks hexo analyst rating Privacy Policy Terms of Service Sponsorships Copyright © 2020 Market Realist. All rights reserved. https://marketrealist.com/2019/12/best-dividend-yielding-energy-stocks-2020/ 4/4