The 4 Safest Oil Dividends Right Now
Oil and natural gas prices are hitting highs thanks to a supply-demand imbalance driven by the pandemic and, more recently, geopolitical tensions. Companies in the energy sector have rallied along with the prices of the commodities they produce.
If you are looking to collect dividends from energy producers, it is time to start thinking about downside risk in this highly cyclical sector. When it comes to dividend safety, ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) in the U.S., TotalEnergies (NYSE: TTE), based in France, and Shell (NYSE: SHEL) in the United Kingdom should be on your list of top options. Here's why.
Exxon and Chevron have among the strongest balance sheets in the integrated energy major sector. To put a number on that, Chevron's debt-to-equity ratio is 0.20, and Exxon's is 0.28. Those figures are notably lower than those of the companies' closest peers, where Shell comes in next at 0.48. Don't underestimate the value of a low debt burden, since financial flexibility is most important when times are tough. In fact, during the pandemic energy downturn, Chevron and Exxon were both able to lean on their balance sheets to help protect their dividends and capital spending plans.
Source Fool.com
