Dividends Still an Issue for Energy ETFs

Oil majors have tightened their belts, reducing costs by laying off thousands of workers and halted many new projects. Large integrated oil companies are expected to hold up better than drilling stocks as these giants have both upstream exploration and production, along with downstream refining operations.

The energy sector has suffered some of the most pessimistic first quarter projections, which leaves the oil producers a lot of room to surprise on the upside. In fact, some traders are betting on more upside for the once downtrodden energy patch. As oil prices drag on oil company shares, the correlation between stocks and oil potentially weakened to some extent, which may have benefited broad benchmark investments in the event of further crude oil weakness.

“Nearly 80 percent of energy companies maintained or increased their dividend payments in 2015, according to a post on the Research Centre for Energy Management website. That was despite companies struggling to generate cash in the face of depressed oil prices,” adds CNBC.

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Energy Select Sector SPDR