The energy stocks in the
have lost about half their value this year. The sector is littered with dividend cuts and suspensions, as companies have moved to shore up cash positions amid the pandemic and weaker oil prices. This isn’t the ideal scenario for income investors.
“There are selective opportunities across the energy sector to find sustainable and attractive income,” Devin McDermott, head of North American oil and gas research at Morgan Stanley, tells Barron’s.
Among the dividend-paying energy companies that McDermott favors are
(ticker: CVX) and an assortment of midstream operations, which typically focus on infrastructure, such as pipelines to transport oil and gas. Those include
Magellan Midstream Partners
Enterprise Products Partners
(EPD), both of which are master-limited partnerships—popular income vehicles, at times. Those two MLPs were recently yielding 11.8% and 11%, respectively.
McDermott also likes the dividend outlook for