“After the beating it took amid plunging oil prices, energy looks like the cheapest sector,” according to Morningstar analyst John Gabriel, pointing to the S&P 500 Energy Sector’s low price to fair value.
The larger integrated oil companies are more flush and have a larger war chest to draw upon when times get tough. While big oil has cut stock repurchase plans to save cash, many bigger players have not gone so far as to cut back on dividends. For instance, Exxon and Chevron have exhibited a long standing history of steadily increasing dividends and remain so-called dividend aristocrats. [Oil ETF Dividends Appear Safe…Sort Of]
The energy sector ETFs also offer somewhat decent yields. IYE has a 2.54% 12-month yield. XLE has a 2.65% 12-month yield and VDE hs a 2.07% 12-month yield. According to BlackRock, the energy sector has the third highest dividend yield, behind telecom services and utilities.
For more information on the energy sector, visit our energy category.
Max Chen contributed to this article.