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% dividend rate, Zacks says CVX is a real keeper as a dividend play.

Zacks also likes National Oilwell Varco Inc., in the oilfield services group. “We are a fan of National Oilwell’s healthy backlog, solid balance sheet and strength in international operations, particularly in the Middle East and Brazil,” the research firm says.


Top 10 Global Energy Dividend Plays (By Dividend Yield)

Company                         Dividend Yield

YPF Sociedad Annima      25.10%

China Petroleum                6.20%

Royal Dutch Shell              4.70%

Conoco Phillips                 4.60%

Total                                  4.50%

ENI                                    4.40%

British Petroleum                4.40%

Royal Dutch Shell               4.10%

PetroChina                         3.60%

Encana                               3.60%


Some money managers are high on dividend stocks in the oil sands market.

Derek Gates of Sustainable Wealth Management likes, among others, Canadian Oil Sands and its 6.5% yield, calling it a “pure play exposure” to the Syncrude project.

He also likes Baytex Energy for largely the same reasons. He touts Baytex’s high-quality production “that relies on a low-cost heavy-oil extraction process.”

Gates is also high on Total (4.5% dividend yield) and Shell (4.2%), touting both as “key investors in major oil sands projects in Canada” and offering a “much higher yield” than Exxon, which offers a 25% dividend yield.

Analysts at Split Rock Private Trading are also big on Canadian oil dividend stocks, especially TransCanada Corp., because of its “respectable dividend yield of 3.8%, but also because of their immense and diverse portfolio of products and services.”

In a Sept. 25 research note, Split Rock says the oil giant has “evolved from a company that builds and maintains oil and natural gas pipelines across North America to a full-service energy company that owns and operates an impressive mixture of energy assets -- from traditional coal-fired plants to cutting-edge wind, hydro-electric and nuclear energy power stations. TransCanada has its fingers in just about every aspect of North American energy. Their broad scope of exposure makes them particularly attractive.”

With a withering economic climate that could have a better chance of weakening than growing, oil and gas dividend stocks offer investors an oasis in a chaotic market.

With no shortage of options investors will have to kick a few tires, but at least they’re tires worth kicking.