XLE is home to some of the largest U.S. energy companies, including Dow components Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX).

Profit expectations have fallen dramatically which in turn has pushed the sector’s P/E ratio much higher even as stock prices have declined, though P/Es have come off their highs and estimates appear to have stabilized,” according to AltaVista. [Oil ETF Dividends Appear Safe…Sort Of]

Investors need to identify the sector’s strongest names, which are likely also its biggest members. 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]

“On the end of the spectrum, telecom is the cheapest, trading at just 12 times forward earnings. Second cheapest are the financials. That sector’s ETF (XLF) is at 14.2 times forward earnings,” according to Yahoo Finance.

Energy Select Sector SPDR

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