Oil stocks have traditionally been a good spot for investors to find high dividend yields. The decline in oil demand and production in 2020 has sent shares of oil stocks lower, creating higher dividend yields.
The question could be whether the dividends are sustainable. Here's a look at three dividend oil stocks for investors to consider.
ExxonMobil: One of the largest oil companies in the U.S. and world is Exxon Mobil Corporation (NYSE:XOM).
The company’s dividend yield hit 10% in September, with shares down significantly in 2020. Shares yield 9% and could be a long-term bet on a recovery in oil prices — and Exxon’s history of raising dividends.
The company has seen revenue fall from $197.8 billion to $135 billion for the first nine months of 2019 compared to the same period in 2020. The company reported a net loss of 18 cents per share in the third quarter, which was down from the prior year’s profit of 68 cents a share, but an improvement on the 70-cent loss in the second quarter.
Exxon Mobil’s dividend yield was 5.8%, 7.9% and 7.9% at the time of the first three quarterly payouts in 2020.
In 2019, the quarterly dividend yields were all 5% or less. Analysts have questioned whether the company can keep paying out high dividends.
The company maintained its quarterly payout of 87 cents for the current quarter when some believed it would be cut.
Chevron: Shares of Chevron Corporation (NYSE:CVX) are down 28% in 2020. The company now has a dividend yield of 6%.
The company reported a loss of $207 million in the third quarter, but showed improvements with capital spending down 48% and operating expenses down 12% year-over-year.
Chevron's year-to-date revenue is $69.6 billion, down from $105.3 billion in the prior year.
The acquisition of Noble Energy closed in October, which Chevron said will strengthen the company’s portfolio.
A joint venture for renewable natural gas, CalBioGas, also started production in the third quarter, which could be a growth area for investors to watch.
Chevron typically raises its dividend for the start of every year, which means the next quarterly report will be the one where investors are watching for a dividend raise, cut or the status quo.
Kinder Morgan: The largest energy infrastructure firm in the S&P 500 is Kinder Morgan Inc (NYSE:KMI). The company is tied to the prices of oil and natural gas. Kinder Morgan owns 83,000 miles of pipelines and has 147 terminals that help transport natural gas, gasoline, oil and CO2.
Third-quarter revenue for Kinder Morgan was $2.9 billion compared to $3.2 billion in the prior year period. Earnings per share were 21 cents in the third quarter compared to 22 cents in the prior year.
Kinder Morgan cut its dividend in 2016, but have been raising it every year since to the current 26.25 cents per quarter.
“Once we have completed our 2021 budget process, the board will determine the fourth quarter 2020 dividend and our dividend policy for 2021,” the company said in its third-quarter earnings release.
Shares of Kinder Morgan are down 34% in 2020. While some oil stocks have rallied in the last month, Kinder Morgan shares are up 9%.