While the stock market is witnessing an uptrend on investor optimism around impressive third-quarter corporate earnings, factors such as the continued spread of the COVID-19 Delta variant, supply chain disruptions, and rising inflation could bring volatility roaring back to the market.

Tight supply and heightened demand have pushed oil and natural gas prices to multi-year highs lately. And because rising oil prices increase input costs for several industries, the Producer Price Index (PPI) is increasing, which could be a significant cause of concern for the stock market.

On the other hand, the energy sector is thriving on rising oil and natural gas prices. Therefore, we think investors looking to hedge their portfolios against potential market volatility could bet on fundamentally strong energy stocks Marathon Petroleum Corporation (MPC), Continental Resources, Inc. (CLR), Woodside Petroleum Ltd (WOPEY), and PDC Energy, Inc. (PDCE), which have impressive dividend histories.

Marathon Petroleum Corporation (MPC)

MPC refines, markets, retails, and transports petroleum products, and operates crude oil and refined product pipelines worldwide. The Finlay, Ohio, company operates in two segments—Refining & Marketing; and Midstream. As of December 31, 2020, it operated 7,090 branded outlets through independent entrepreneurs.

MPC paid a $0.58 quarterly cash dividend on September 10, 2021. The stock pays a $2.32 per share dividend annually, which translates to a 3.4% yield. Its dividend has grown at a 4% rate over the past four years.

On August 19, 2021, MPC and Archer-Daniels-Midland Company (ADM) agreed to form a joint venture to produce soybean oil to supply the rapidly growing demand for renewable diesel fuel. ADM’s Spiritwood complex, which is set to begin operations in 2023, is expected to produce 600 million pounds of refined soybean oil annually, enough feedstock for approximately 75 million gallons of renewable diesel per year. Both companies are striving to reduce the carbon intensity of their businesses.

For its fiscal second quarter, ended June 30, 2021, MPC’s revenue increased 142.5% year-over-year to $29.83 million. The company’s income from continuing operations came in at $965 million, indicating a 67.8% year-over-year improvement. Its adjusted net income was $437 million, compared to a $868 million loss in the prior-year period. Its adjusted EPS was $0.67, versus a $1.33 loss per share in the year-ago period. The company had $11.84 billion in cash and equivalents as of June 30, 2021.

A $1.25 consensus EPS estimate for the current year indicates a 136.3% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect its revenue to be $98.53 billion for the current year, representing a 42.7% rise year-over-year. MPC’s EPS is expected to grow at a 43.8% rate per annum over the next five years.

The stock has gained 128.2% over the past year and 10.2% over the past month. It closed yesterday’s trading session at $68.20.

MPC’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a B grade for Momentum, Sentiment, and Quality. Click here to see the additional ratings for MPC’s Growth, Value, and Stability. Of the 89 stocks in the Energy – Oil & Gas industry, MPC is ranked #19.

Continental Resources, Inc. (CLR)

CLR is a crude oil and natural gas company with properties primarily in the north, south, and east regions of the United States. The Oklahoma City, Okla.-based concern sells its crude oil and natural gas production to energy marketing companies, crude oil refining companies, and natural gas gathering and processing companies.

CLR paid a $0.15 quarterly cash dividend on August 20, 2021. The stock pays a $0.15 per share dividend annually, which translates to a 0.5% yield. The company’s dividend has grown at a 0.2% rate over the past four years.

For its fiscal second quarter, ended June 30, 2021, CLR’s total revenues increased 603.1% year-over-year to $1.24 billion. The company’s income from operations came in at $445.17 million for the quarter, versus $296.78 million loss in the prior-year period. CLR’s adjusted net income was $332.77 million, versus a $255.70 million net loss in the year-ago period. Its adjusted EPS came in at $0.91, versus a $0.71 loss per share in the prior-year period. As of June 30, 2021, the company had $150.04 million in cash and cash equivalents.

A $4.29 consensus EPS estimate for the current year represents a 466.7% rise from the prior-year period. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Analysts expect CLR’s revenue to be $5.28 million for the current year, representing a 104% rise from the prior-year period. The stock’s EPS is expected to grow at a 5% rate per annum over the next five years.

CLR gained 273.4% in price over the past year and 17.2% over the past month. It ended yesterday’s trading session at $51.83.

CLR’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. 

The stock has an A grade for Momentum, and a B grade for Growth, Sentiment, and Quality. Click here to see the additional ratings for CLR’s Value and Stability. CLR is ranked #7 in the Energy – Oil & Gas industry.

Woodside Petroleum Ltd (WOPEY)

Headquartered in Perth, Australia, WOPEY explores for, evaluates, develops, produces, markets, and sells hydrocarbons internationally. The company produces liquefied natural gas, pipeline natural gas, condensate, liquefied petroleum gas, and crude oil.

WOPEY was scheduled to pay a $0.63 quarterly cash dividend on October 15, 2021. The stock pays a $0.30 per share dividend annually, which translates to a 3.31% yield. The company’s dividend has grown at a 4.9% rate over the past four years.

By collaborating with the State Government of Western Australia, WOPEY announced plans to establish a world-scale hydrogen and ammonia production facility in southern metropolitan Perth on October 25, 2021. This H2Perth project aims to produce low-cost, low carbon hydrogen-based energy for customers and produce up to 1500 tonnes per day (tpd) of hydrogen for export in the form of ammonia and liquid hydrogen. The company expects to stimulate and enable increased renewable power generation in Western Australia and support State Government priorities for strategic industry creation and local manufacturing.

For its fiscal third quarter, ended September 30, 2021, WOPEY’s total revenue increased 113.3% year-over-year to $1.57 billion. Analysts expect the stock’s revenue to improve 70.2% year-over-year in the current year to $5.87 billion. WOPEY has gained 36.7% in price over the past year and 12.6% over the past month. It ended yesterday’s trading session at $18.11.

It’s no surprise that WOPEY has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Momentum, and a B grade for Growth, Stability, and Quality. Click here to see the additional ratings for Value and Sentiment. WOPEY is ranked #10 of 89 stocks in the Energy – Oil & Gas industry.

PDC Energy, Inc. (PDCE)

PDCE operates as an independent exploration and production company that produces, develops, acquires, and explores crude oil, natural gas, and natural gas liquids. The company’s operations are located primarily in the Wattenberg Field in Colorado and the Delaware Basin in Texas. As of December 31, 2020, it owned interests in approximately 3,727 productive gross wells.

PDCE paid a $0.12 quarterly cash dividend on September 22, 2021. The stock pays a $0.12 per share dividend annually, which translates to a 0.45% yield. The company’s dividend has grown at a 0.04% rate over the past four years.

On October 6, 2021, the Colorado Oil and Gas Conservation Commission (COGCC) approved PDCE’s Spinney Oil & Gas Development Plan (OGDP) permit application. This marks PDCE’s first approved permit under the new rules, and the company is looking forward to securing permits for its future undeveloped Wattenberg drilling inventory.

PDCE’s total revenues came in at $228.87 million for its fiscal second quarter, ended June 30, 2021, representing a 320.6% improvement year-over-year. As of June 30, 2021, PDCE had $109.75 million in cash and cash equivalents.

Analysts expect PDCE’s EPS to increase 204.7% year-over-year in the current year to $6.66. It surpassed the Street’s EPS estimates in each of the trailing four quarters. A $1.63 billion consensus revenue estimate for the current year represents a 22% rise from the prior-year period. The stock’s EPS is expected to grow at a 27.25 rate per annum over the next five years.

The stock has rallied 308% over the past year and 14.3% over the past month. It ended yesterday’s trading session at $53.69.

PDCE’s POWR Ratings reflect its solid prospects. The company has an overall B rating, which translates to Buy in our proprietary rating system.

PDCE has an A grade for Momentum, and a B grade for Growth and Quality. In addition to the POWR Ratings grades we’ve just highlighted, one can see PDCE’s ratings for Value, Sentiment, and Stability here. PDCE is ranked #5 in the  Energy – Oil & Gas industry.

MPC shares were trading at $68.68 per share on Tuesday afternoon, up $0.48 (+0.70%). Year-to-date, MPC has gained 71.29%, versus a 23.47% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

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