Crude oil prices fell through the $90 mark on Sept. 25, as the summer-long run-up in prices wanes with more sour economic news for investors to absorb.
There’s more toxic debt news from Spain and mixed housing data from the U.S., along with myriad downward economic forecasts for 2013 from some Wall Street analysts.
According to Goldman Sachs chief executive Lloyd Blankfein , the global economy will “muddle through,” but any further deterioration in China and Europe could push the global economy back into recession and take oil prices down.
"I think the biggest problem that Europe has is growth, and the tail-risk problem is a real go-off-the-rail, bust up of the euro," Blankfein said in a Toronto speech last week. "I'm very confident in the (China) outcome, but consumer demand in the country is a big issue going forward.”
Calling the current Chinese economy “disappointing,” Blankfein says the lack of demand in the country “shouldn’t last for a long time."
That global scenario is taking a toll on oil company stocks, as oil prices have fallen by $5 in the past week as measured by the NYMEX crude oil index.
With energy company earnings numbers still a week away, it could be high time that investors look for oil and gas stocks that can hold up in a potentially sour economy.
That means oil and gas stocks with a good dividend story, and that’s a good place for energy investors to start looking.
Zacks Investment Research says the current market environment is target-rich for dividend stocks. “Considering the turbulent market dynamics of the energy industry, we always advocate the relatively low-risk conglomerate business structures of the large-cap integrateds with their fortress-like balance sheets and ample free cash flows,” Zacks says in a recent research report.
Zacks’ analysts are bullish on Chevron right now, calling it a strong dividend play.
“Chevron’s current oil and gas development project pipeline is among the best in the industry, boasting large, multiyear projects,” the report says. “Additionally, Chevron possesses one of the healthiest balance sheets among peers, which helps it to capitalize on investment opportunities with the option to make strategic acquisitions.”
Chevron’s dividend story is an intriguing one, and a profitable one for long-term investors. All told, Chevron’s dividend has shot up 150% since 2002, and its cash balance has risen a staggering 685%. With huge cash reserves and a solid 3.10%