Companies of this nature are sensitive to the capital spending cycle of this industry because most of the new capital is derived from companies drilling new wells. This area of the oil market is highly cyclical and sensitive to the supply and demand relationship, similar to other commodities, reports John Gabriel for Morningstar.

The Wall Street Journal reports that some energy companies are paying fat dividend yields despite low growth prospects.

Related ETFs include:

  • PowerShares Dyanmic Oil and Gas Service ETF (NYSEArca: PXJ)
  • SPDR S&P Oil and Gas Equipment Services (NYSEArca: XES
  • PowerShares Dynamic E&P ETF (NYSEArca: PXE)
  • PowerShares Dynamic Energy ETF (NYSEArca: PXI)
  • iShares Dow Jones U.S. Oil Equipment Index (NYSEArca: IEZ)

SPDR Energy Select Sector


Tisha Guerrero contributed to this article.