3 of the Safest Energy Stocks to Buy in a Bear Market
Looking at energy from the broadest possible perspective opens up a vast field of investment opportunities. All are not created equal, however, with some companies proving their value most by continuing to reward investors with reliable dividends even through the most difficult market conditions. That's why ExxonMobil (NYSE: XOM), Enbridge (NYSE: ENB), and The Southern Company (NYSE: SO), despite vastly different business models, are all energy stocks you'll be happy to own in a bear market.
Exxon is an integrated energy major, which means that its operations span across the oil and natural gas industry from production (upstream) to refining (downstream). Since refining benefits from low oil prices, this diversification provides some balance to the business. That's worthwhile because oil and gas are highly cyclical commodities. But, even with the company's broad portfolio of businesses, oil prices are still the biggest driver of Exxon's top and bottom lines. When oil is high, the company can log record profits, but when oil is in the dumps, red ink often follows.
And yet, despite the ups and downs, Exxon has increased its dividend annually for 41 consecutive years. An important aspect of this is the company's balance sheet, which is among the strongest of its closest peers. Basically, during the tough times, it has the leeway to add debt to fund its business and dividend. When good times eventually return, it pays down the debt. If you are looking to add an oil company and place a high value on dividend consistency, Exxon is one of your top options. The dividend yield is around 3.3% today.
Source Fool.com
