Believe It: A Very Bold Call on a Big Energy ETF

It takes a heaping dose of contrarian thinking to be bullish on energy stocks and the relevant exchange traded funds in the current environment. Underscoring the contrarian thinking required to be bullish on equity-based energy ETFs, 17 such funds made 52-week lows on Tuesday.

That includes the Energy Select Sector SPDR (NYSEArca: XLE). XLE is the worst performer of the nine sector SPDRs this year, but being home to some of the largest energy companies in the world provides XLE with some advantages even at a tumultuous time for the energy sector.

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 historically exhibited a long standing of steadily increasing dividends and remain so-called dividend aristocrats. [Oil ETF Dividends Appear Safe…Sort Of]

Despite languishing oil prices and payout cuts and suspensions by smaller energy companies, many of XLE’s marquee components have boosted dividends this year. In April, Dow component Exxon Mobil (NYSE: XOM) said it will raise its quarterly dividend to 73 cents per share from 69 cents, extending the largest U.S. oil company’s dividend increase streak to 33 years.

Potentially seeing the forest through the trees, AltaVista sounded a bullish tone on XLE in a new research note, rating the ETF overweight, which implies above average appreciation potential.