Bottom of the Barrel: Energy Stocks

Wall Street strategists have repeatedly tried to locate the “bottom” for energy stock prices this year, but they just can’t seem to find the lowest point. While speculation has been futile, strategists think (once again) that prices may finally, almost, be at the potential bottom. Energy stocks in the S&P 500 have fallen more than 31 percent since their peak in June of 2014. S&P 500 is now only 7 percent of the index’s market capitalization, the lowest in more than a decade. With a dividend of 3.3 percent, it’s the third-highest paying group among the 10 main industries.

Exxon Mobil Corp. is down 25 percent since June of 2014, including a recent 4.6 drop at the end of July. Exxon is trading at a three-year low and paying a dividend that yields an almost two-decade high of 3.6 percent. Exxon Mobil’s vice president of investor relations, Jeffrey J. Woodbury, told analysts on a conference call, “Fundamentally, we’re committee to our shareholders to continue to provide a reliable and growing dividend.” This follows Exxon’s lowest profit reports since 2009.

Meanwhile, Chevron Corporation chief financial officer Patricia E. Yarrington said, “we said we would cover the dividend from free cash flow in 2017. We stand by that commitment.” A new high since 1992, Chevron is paying almost 5 percent of its share price in dividends. “Chevron is just one of the 19 energy companies in the S&P 500 with dividend yields above 10-year notes, and in recent weeks it exceeded Verizon Communications Inc. as the highest yielding blue chip in the Down Jones Industrial Average. “

While the index of S&P 500 companies reached its weakest level since 2012 recently, oil still has not set a new low for 2015. While the energy stocks continue to fall, investors are dealing with a multitude of mixed signals. If you want to make a change in your portfolio, but are not sure how to account for the energy stocks news, call an advisor at Apex Financial Advisors today. We can help you secure your wealth, proactively prepare to grow it, and minimize your portfolio’s exposure to risk.