The firm invests following the principles laid out by Benjamin Graham Continue reading...
The Zacks Analyst Blog Highlights: EOG Resources, Occidental Petroleum, ExxonMobil, Chevron and BP
British investor Legal & General said on Wednesday it would vote against re-electing the chair of Exxon Mobil at a shareholder meeting on May 27, saying the U.S. oil giant had not done enough to tackle climate change. Legal & General Investment Management (LGIM), which has $1.5 trillion under management and owns about 0.5% of Exxon or shares worth about $1 billion, said the U.S. company had not disclosed its full greenhouse gas emissions and had failed to set company-wide emissions reduction targets.
After last month's collapse, oil prices have bounced back. Will BP (NYSE:BP) stock see an additional boost? The oil giant's shares have moved higher from their March sell-off lows. Rising from $15.51 per share to $23.62 per share, BP stock got a more than 50% gain in two months.Source: TK Kurikawa / Shutterstock.com Yet, other integrated names have performed even better during this timeframe. Take Chevron (NYSE:CVX), for instance. CVX shares are up about 80% from their 52-week lows. ConocoPhillips (NYSE:COP)? Their shares have doubled since their March lows.So, what's the issue here? More like two issues. With investors anticipating a dividend cut and the company shouldering a massive debt load, there are plenty of reasons for concern.InvestorPlace - Stock Market News, Stock Advice & Trading TipsDespite these overhangs, today's prices may be a solid entry point for BP stock. Sure, risks remain. However, energy prices continue to bounce back. With the novel coronavirus soon in the rearview mirror, "return to normal" will finally happen. With these factors in mind, there's plenty of potential for shares to move higher. Why the Rebound Has Only Just Started For BP StockOil may no longer be trading at negative prices, but it's still substantially lower than where it was just a few months prior. At the start of 2020, crude oil was trading above $60 a barrel. Today? Around $34 a barrel. * 7 Excellent Penny Stocks Ready to Roar Besides beaten-down prices, things are moving in the right direction. The coronavirus took its toll. With much of the world's economic activity brought to a halt, it's no surprise demand for petroleum collapsed.Yet, with the pandemic slowly ending, expect energy prices to continue bouncing back. Granted, experts like the EIA (Energy Information Administration) don't see prices heading above $50 per barrel until the end of 2021.However, BP is taking active steps to improve its cash flow situation while oil lingers at lower-than-normal prices. By slashing costs, the company expects its breakeven oil price to fall from $56 a barrel in 2019 to just $35 a barrel in 2021.Granted, this implies continued profitability challenges this year. But with Wall Street taking a forward-looking approach, shares could continue to climb in tandem with oil prices, as investors anticipate a rebound in net income and cash flow.In short, shares look appealing as a bottom-fisher's buy. There are some risks to keep in mind before you put in a buy order. Is the Dividend Safe?A dividend cut seems to be the other shoe that's yet to drop. As InvestorPlace's Tom Taulli wrote May 18, the company's current cash flows can't cover the dividend. In short, shares now have a seemingly high yield of 10.7%, but that's only because investors expect a cut sometime soon.Is their validity to these fears? Peers like Royal Dutch Shell (NYSE:RDS.B, NYSE:RDS.A) have already slashed their dividends. And analysts like Morgan Stanley's Martijn Rats think BP is the next one to announce a cut. He sees the company reducing its dividend by half in order to avoid taking on additional debt.Speaking of debt, that's the other issue at hand with this company. Taulli touched on this in his write-up, stating that the company's outstanding debt continues to climb. Coupled with reduced cash flow, this could mean a serious liquidity situation.Or does it? Based on a market update from back in April, the company detailed their liquidity situation, and their game plan to ride out today's storms. As of March 31, BP had $32 billion in cash and available credit lines.To combat sharp declines in cash flow, the company announced a 25% cut to capital expenditures. They also plan billions in cost-cutting across their upstream (exploration) and downstream (refining/marketing) business units. Pending asset sales could also free up additional capital.The situation at BP is far from perfect, yet these aforementioned risks are likely accounted for in today's valuation. When the other shoes does drop, don't expect shares to fall much further from here. Risks Remain, But BP Could Move HigherThings turn on a dime in the oil patch. Whether it be Middle East conflict, trade wars, or pandemics, it's tough to "predict the unpredictable" with energy prices. With today's crisis slowly dissipating, it's fair to assume a bounce back in demand is just around the corner. In short, plenty of reason for oil prices to continue trending higher.Although the company has a lot on its plate regarding debt and an unsustainable dividend, investors have largely priced these risks into the current share price. If and when the dividend gets a haircut, don't expect shares to sell off further.In short, with the potential for shares to rally in tandem with rising oil prices, consider BP stock a buy.Thomas Niel, contributor to InvestorPlace, has written single-stock analysis since 2016. As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities. More From InvestorPlace * Top Stock Picker Reveals His Next 1,000% Winner * America's Richest ZIP Code Holds Shocking Secret * 1 Under-the-Radar 5G Stock to Buy Now * The 1 Stock All Retirees Must Own The post Despite Challenges, Consider BP Stock a Bottom-Fisher's Buy appeared first on InvestorPlace.
B&G Foods, Boot Barn, Royal Dutch Shell, TOTAL and BP highlighted as Zacks Bull and Bear of the Day
Morgan Stanley analyst calls rate of spending on capital expenditures and on dividends unsustainable.
The Zacks Analyst Blog Highlights: ExxonMobil, Chevron, BP, Equinor and Royal Dutch Shell
I wanted to find five foreign, profitable companies that investors would find worthwhile. They would have to be cheap stocks with low price-earnings ratios and high dividend yields. The idea is that by diversifying a portion of your portfolio in non-U.S. stocks, you will enhance your overall returns.Often, foreign equities provide a return that is not correlated with U.S. stocks. At least, that is the theory. There are some significant drawbacks. I have managed non-U.S. equity portfolios on the institutional side for a good number of years and am well familiar with these issues.For one, non-U.S. stocks are subject to currency fluctuations. When the dollar rises, the U.S. dollar return on non-U.S. equities tends to lag. However, I have learned that this effect tends to recycle over a number of years and sort of washes out.InvestorPlace - Stock Market News, Stock Advice & Trading TipsA second issue is that often, non-U.S. stocks pay dividends just twice a year. This is because the vast majority of foreign companies only report their earnings semi-annually. However, the larger U.S. listed American Depository Receipts (ADR) or American Depository Shares (ADS) tend to report quarterly and pay their dividends that way. This occurs either because U.S. holders are a big percentage of the share base, or the company perceives that its stock price is "made" in the U.S.Moreover, another issue is that many non-U.S. companies will pay their dividends out as a percentage of their semi-annual earnings. In other words, the dividends paid each year can fluctuate, based on profits. U.S. companies tend to pay out a steady dividend that increases over time. I have learned again that the larger non-U.S. stocks have started following the steady dividend approach.The following five cheap stocks are worthwhile investments. They all have higher-than-normal dividend yields that tend to be paid quarterly. They also have low price-earnings ratios.Here are five cheap stocks -- that pay nice dividends -- to buy now: * BP Midstream Partners (NYSE:BPMP) * Publicis Groupe (OTCMKTS:PUBGY) * Rio Tinto Group (NYSE:RIO) * Vodafone Group (NASDAQ:VOD) * Total (NYSE:TOT)Let's dive in and look at these foreign, cheap stocks more closely. Foreign Cheap Stocks: BP Midstream Partners (BPMP)Source: Pavel Kapysh / Shutterstock.com Dividend Yield: 12.5%BP (NYSE:BP) is a profitable foreign stock with a nice 10.9% dividend yield. But I thought I would focus on one of its spinoff companies, BP Midstream Partners. BPMP has a higher dividend yield than BP.BPMP is a U.S.-listed master limited partnership (MLP) that is focused solely on the midstream portion of the oil and gas life cycle. That involves running oil and gas onshore and offshore pipelines and terminals.Source: Mark R. Hake, CFA Now that more companies are looking to store oil and gas, its assets are close to fully occupied.BPMP declared a quarterly dividend on April 15 for 34.75 cents per share. That works out to an annualized dividend of $1.39. At today's price of $11, the stock yields 12.5%. This is higher than BP's distribution yield of just under 11%.The company reported excellent results for Q1 on May 8. It says that the quarterly distribution is covered 1.17 times by its earnings. Moreover, BPMP says it is targeting a 5% increase in its distributions to shareholders in 2020 over 2019. * 7 Stocks to Buy That Have Nothing But Upside In Their Future At 7.3 times earnings, with a 16.8% free cash flow yield and a 12.5% dividend yield, BPMP is very profitable and cheap. Investors should take a close look at the company. Publicis Groupe (PUBGY)Source: shutterstock.com Dividend Yield: 4.9%Next on my list of cheap stocks is Publicis Groupe. This is a French advertising, communications and digital marketing company. Publicis has its tentacles in a lot of related areas like media, technology, healthcare communications and consulting services. It owns famed companies Saatchi & Saatchi and Leo Burnett.Publicis Groupe trades on the over-the-counter market. Its dividend yield has been about 9%, and the forward price-earnings ratio is about 7. So it is a profitable company, but a cheap stock.Source: Mark R. Hake, CFA On April 13, Publicis reported its revenue, which was up 17%, although it included the effects of the acquisition of Epsilon. Its organic growth was down by 2.9% over last year. The company did not report its earnings, which apparently are done on a semi-annual basis.In addition, Publicis Groupe decided to cut its dividend by 50% to 1.15 euros. This works out to about 31.12 cents per ADR.There are four PUBGY ADRs per French ordinary share. As a result, PUBGY has a dividend yield of 4.9%. The company said it will pay the dividend in September.So Publicis Groupe is a cheap and profitable foreign stock with an above-average dividend yield. Rio Tinto Group (RIO)Source: BalkansCat / Shutterstock.com Dividend Yield: 8.4%Rio Tinto is a $74 billion mining company based in London. It produces iron ore, bauxite, copper, gold, silver, aluminum and a host of other commodities.Last year, Rio Tinto started paying dividends four times a year. It is still not clear that it will continue with this practice. I suspect it will, as there does not seem to be an announcement to the contrary. Based on last year's dividend of $3.82 per share, RIO stock yields 8.4%.Source: Mark R. Hake, CFA Moreover, the company has a website section showing consensus financial information, including production, revenue and earnings estimates by all its sell-side analysts. This is not allowed by U.S. regulators for U.S. stocks, for no good reason. But it is fairly common for foreign stocks under looser financial information regulations.Based on this I estimate that earnings will be $5.04 per ADR this year. The company just needs global lockdowns to relax, or at least ease up.This will increase the demand for global committees, especially iron and copper. As demand rises, the price of these commodities will increase and the company will make more money.This puts the stock at a very cheap multiple of just 9 times earnings. So, combined with the 8.4% dividend, RIO stock offers very good value for investors. Vodafone Group (VOD)Source: Photos by D / Shutterstock.com Dividend Yield: 6.6%Vodafone is a telecom and cable TV company based in the United Kingdom. The company has a $43.8 billion market value and its ADR is listed on the Nasdaq Exchange.VOD stock has a very high dividend yield at 6.6% and is quite attractive to investors at this level. It pays the dividend twice a year. Vodafone kept its final dividend level with last year in its earnings announcement on May 12.Source: Mark R. Hake, CFA This requires a little explanation. First of all, Vodafone is like most other UK stocks that report their earnings and dividends twice a year. But for some reason, even though VOD's earnings are in pounds, it pays out the dividend in eurocents.So for this fiscal year ending March 31, the Vodafone annual dividend was kept stable at 9 eurocents per share. Now since there are 10 ordinary shares for every one VOD ADR, and since the exchange rate is $1.0823 per euro, the U.S. dividend per VOD ADR is about 97 cents. That makes the annualized yield about 6.6%.To make things more complicated, the upcoming final dividend (half of the total dividend, since an interim dividend was already paid) is set at 4.5 eurocents per ordinary share. This will be paid on Aug. 7, 2020. This effectively makes the upcoming payment a dividend yield of about 3.3%. This depends on the exchange rate when the ADR payment is set.Vodafone's earnings for the year ending March were reasonably good. The bottom line is that the company expects its FY 2021 free cash flow to decline slightly from 5.7 billion pounds to 5.4 billion pounds. As a result, I expect the dividend will be kept level.This makes VOD stock very attractive as a stable, well-covered and high-dividend play for income investors. Total (TOT)Source: MDOGAN / Shutterstock.com Dividend Yield: 8.8%Total is a French oil and gas company. Last year the company paid four dividends to its shareholders, although it calls three of them "interim" dividends and the last one a "final" dividend.This past year, the company increased its dividend 5% to 2.68 euros per share. This works out to $2.92 per ADR.Source: Mark R. Hake, CFA As a result, the stock has a very attractive dividend yield of 8.8% for investors.I estimate that the stock is also cheap at just 7.4 times earnings. In its most recent Q1 earnings presentation, Total said its break-even level is at $25 per barrel of oil.So I expect the company will be able to stay profitable this quarter. As economic activity picks up, the company will be able to make more money once the price of oil rises.This is an attractively priced stock at below 8 times this year's earnings, based on the company's recent earnings results.As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. Mark Hake runs the Total Yield Value Guide, which you can review here. More From InvestorPlace * Top Stock Picker Reveals His Next 1,000% Winner * America's Richest ZIP Code Holds Shocking Secret * 1 Under-the-Radar 5G Stock to Buy Now * The 1 Stock All Retirees Must Own The post 5 Cheap Foreign Stocks That Are Perfect for Dividend Investors appeared first on InvestorPlace.
BP
Legal & General Investment Management, a British asset manager with a $1 billion stake in Exxon, wants the company to make a more serious commitment to combating climate change.
Saudi Aramco's debt is expected breach target levels as an oil price collapse triggered by the coronavirus forces it to borrow to meet the world's largest dividend pledge and buy a major stake in petrochemicals maker SABIC, analysts said. Compared with western oil companies, Saudi Arabia's national oil company appears in robust financial health.
We have analyzed three major integrated companies - ExxonMobil (XOM), Chevron (CVX) and BP plc (BP) - to get a view on dividend cut.
Activist firm releases portfolio. Top buys include auto part manufacturer and British oil company Continue reading...
The coronavirus pandemic has indelibly impacted the global energy sector. Although the demand for oil has noticeably dropped and prices have plunged, the pace of shift to renewable energy from fossil fuel is still uncertain.
U.K. stocks joined a global rally on Monday, as the chairman of the Federal Reserve said the U.S. central bank still had tools to fight the economic crisis and as data showed new virus cases growing at the slowest rate in months.
Shareholder activists prodding Exxon Mobil Corp on climate-change proposals are backing calls for an independent board chairman as the oil major steps up efforts to keep climate proposals off its ballot. New York state's pension fund, Church Commissioners for England, and Legal & General Investment Management, which all battled Exxon over global warming and lobbying disclosures have this year taken up a call to split the chief executive officer and chairman roles, expecting a better reception from an outsider. "The company has been a laggard on financial performance, climate risk management and lobbying disclosure for quite some time now," said Thomas DiNapoli, New York state comptroller and head of the state's biggest pension fund.
Firm of the late Irving Kahn establishes position in a Berkshire bank holding Continue reading...
More than £30 billion in company dividend cuts has left a huge hole in the pockets of U.K. investors in retirement and those who rely on it to top up their monthly income.
Guru also trimmed Booking Holdings and Apple positions Continue reading...
Royal Dutch Shell's historic 66% dividend cut has paved the way for its British rival, BP (NYSE: BP), to secure the crown as the oil major with the highest dividend yield. BP management recently reaffirmed their decision to keep the quarterly dividend unchanged as of Q1 2020, meaning BP's dividend yield stands at a whopping 11.3% as of this writing.