Investors should buy oil stocks at this time because there’s always a chance that oil prices may rise again in these uncertain times. Buying oil stocks can be risky due to the unpredictable nature of commodity prices. Investors looking to gain more exposure to energy companies should only invest a small percentage of their portfolio in these stocks. Because betting too much on one sector can lead to significant losses.
Oil stocks such as the ones I mention below have seen significant increases in their share price over the last year and offer investors great dividend payouts as well. These companies are some of the best performers in the energy sector, and investors considering oil stocks should give these some attention.
Frontline (FRO)
Frontline (NYSE:FRO), located in Cyprus, is an energy transportation company that ships crude oil products worldwide with its fleet of various-sized tankers.
Over the last year, Frontline has seen growth in its share price of approximately 63%. This is due to increases in revenue. Recent news is that Frontline will acquire 24 vessels from a competing tanker company, Euronav N.V. (NYSE:EURN), based in Belgium. This deal now increases Frontline’s vessel count from 65 to 89, making it a more dominant company in the crude oil transportation business.
Frontline reported their earnings results for the second quarter of 2023 on Aug. 24. It stated revenue growth of 74% and net income more than quadrupled compared to the previous year due to its spot charter prices. They also offer an excellent dividend ratio of 11.98% annually. And for the second quarter, their dividend payout was $0.80.
Frontline has seen record earnings recently, and with the recent acquisition, it will have a decent number of new vessels to utilize and gain profit over time.
Marathon Petroleum (MPC)
Marathon Petroleum (NYSE:MPC), Headquartered in Findlay, Ohio, operates as a downstream and midstream energy company. Downstream within the energy market refers to turning oil and gas into their final products ready for distribution, and midstream refers to primarily the transport and storage of energy products. Marathon Petroleum also engages in refining and distributing various crude oil products produced at their refinery locations throughout the U.S.
Marathon Petroleum stock has seen an increase of 22% in the last year. On Oct. 31, they released their earnings result for the third quarter, which stated a drop in total revenue of 12% and a decline in net income of 28% compared to last year. Marathon Petroleum took the most prominent hit in their refining and marketing segment revenue, which fell by 20%, but their midstream segment saw an increase of 3% within the same time period.
Marathon also announced within their earrings release that they would increase their dividend payout to investors by 10%. And they authorized an additional $5 billion in authorized share buybacks.
Marathon Petroleum is one of the largest refining companies, and even with earnings that didn’t show much growth, investors are still interested in the company partly due to their extensive share repurchase program.
Dorian LPG (LPG)
Dorian LPG (NYSE:LPG) Based out of Stanford, Connecticut, they specialize in the marine transport of liquified petroleum gas (LPG) with a fleet of 25 vessels.
On Nov. 2, Dorian released their earnings report for the third quarter, which stated that their total revenue grew by 90% and net income rose by more than three-fold. The company’s overall revenue increase can be attributed to its growing fleet size and much higher charter rates similar to Frontline.
In the past year, their share price has more than doubled. They also offer a solid dividend of approximately 11% annually, and their last dividend payout to investors of $1.00 per share occurred in May.
Dorian LPG has seen substantial growth over the last year and may continue to see its share price increase. However, investors should be aware that their dividend payout is very high and may only be sustainable for a short period of time.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
