In response to Russia’s invasion of Ukraine, Western governments have imposed economic sanctions to isolate Russia and cut it off from global oil markets. This caused a surge in crude oil prices last month. However, President Biden last week announced an unprecedented strategic oil reserve release of one million barrels per day to control gasoline price inflation. This caused crude oil prices to retreat slightly. Nevertheless, with several European countries planning to impose an import embargo on Russian oil, oil prices are expected to rally again.
Fundamentally sound oil and gas companies are known for paying high dividends and have a long history of increasing payouts annually. Dividend stocks are attracting investors’ attention because they offer a steady source of income. Investors’ interest in dividend stocks is evident in SPDR S&P Dividend ETF’s (SDY) 8.3% gains over the past six months.
Given these factors, we think it could be profitable to invest in high-quality Foreign Oil & Gas stocks BP p.l.c. (BP), Canadian Natural Resources Limited (CNQ), and FLEX LNG Ltd. (FLNG), which deliver high dividend payouts.
BP p.l.c. (BP)
Headquartered in London, BP engages in the global energy business with operations in North and South America, Europe, Australia, Africa, and Asia. The company operates through four segments: Gas & Low Carbon Energy; Production & Operations; Customers & Products; and Rosneft. It produces and trades in oil and gas, offers biofuels, and operates onshore and offshore wind power and solar power generating facilities.
On March 29, BP and Uber Technologies, Inc. (UBER) formed a new global strategic convenience delivery partnership to offer quality convenience products from select retail locations. It covers retail sites in Australia, New Zealand, Poland, South Africa, and the West Coast of the U.S. This partnership might support BP’s goal of growing its customers’ reach and expanding its delivery footprint.
In its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, BP's total revenues and other income increased 73.1% year-over-year to $52.24 billion. Its profit before interest and taxation improved 159.2% from the prior-year period to $4.79 billion. Its adjusted EBITDA grew 56.2% year-over-year to $1.37 billion. BP’s profit for the period rose 73.6% year-over-year to $2.58 billion. And its profit for the period attributable to BP shareholders per ADS rose 75% year-over-year to $0.70.
BP pays $1.31 as dividends annually, yielding 4.3% at its current share price.
The $52.94 billion consensus revenue estimate for its fiscal year 2022 first quarter, ended March 31, 2022, represents 53.2% growth from the same period in 2021. The $1.32 consensus EPS estimate for the to-be-reported quarter indicates a 68.7% year-over-year rise. It is no surprise that BP has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock gained 10.2% in price over the past month and 23.8% over the past year. BP closed Friday's trading session at $30.47.
BP's POWR Ratings reflect this promising outlook. It has an overall B grade, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
BP has an A grade for Momentum. Within the A-rated Foreign Oil & Gas industry, it is ranked #24 of 42 stocks.
To see additional POWR Ratings (Stability, Value, Quality, Growth, and Sentiment) for BP, click here.
Canadian Natural Resources Limited (CNQ)
CNQ in Calgary, Canada, produces, markets, and sells crude oil, natural gas, and natural gas liquids (NGLs). CNQ operates primarily in Western Canada, the United Kingdom portion of the North Sea, and Offshore Africa. The company offers synthetic crude oil, bitumen, heavy crude oil, light and medium crude oil, and Pelican Lake heavy crude oil.
In March, CNQ declared a quarterly cash dividend on its common shares of CAD0.75 ($0.60) per common share. This represents a 28% increase in its quarterly dividend and demonstrates the confidence that its board of directors has in the sustainability of its business model, the strength of its balance sheet, and the long-life low decline asset base of CNQ.
Last December, CNQ completed the acquisition of all the issued and outstanding common shares of Storm Resources Ltd. The acquired production, infrastructure, and land complement CNQ’s natural gas assets in the Northeast British Columbia area. The acquisition is expected to provide the company with further opportunities to optimize and leverage synergies within its diversified portfolio.
CNQ's revenue increased 83.6% year-over-year to CAD9.21 billion ($7.32 billion) in its fiscal 2021 fourth quarter, ended Dec. 31, 2021. CNQ’s earnings before taxes improved 349.3% year-over-year to CAD3.41 billion ($2.71 billion). The company’s net earnings and net earnings per common share came in at CAD2.53 billion ($2.01 billion) and CAD2.14 ($1.70), respectively, registering an increase of 238.3% and 239.7% from the prior-year period.
CNQ pays $2.37 as dividends annually, yielding 3.7% at its current share price. The company’s dividends have increased at a 19.4% rate over the past five years.
Analysts expect CNQ's EPS for its fiscal year 2022 first quarter, ended March 31, 2022, to come in at $2.05, representing a 141.6% rise year-over-year. The company has an impressive earnings surprise history; it has surpassed the consensus EPS estimates in three of the trailing four quarters.
Shares of CNQ have increased 49.4% in price year-to-date and 110% over the past year. It closed Friday's trading session at $64.27.
CNQ's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B grade, which equates to Buy in our proprietary rating system.
CNQ has a grade of A for Momentum and B for Sentiment and Quality. Within the A-rated Foreign Oil & Gas industry, it is ranked #18 of 42 stocks.
To see additional POWR Ratings (Growth, Value, and Stability) for CNQ, click here.
FLEX LNG Ltd. (FLNG)
FLNG owns and operates liquified natural gas (LNG) carriers. It is headquartered in Hamilton, Bermuda. The company owns and operates more than nine M-type electronically controlled gas injection LNG carriers and four vessels with generation X dual-fuel propulsion systems. In addition, FLNG provides chartering and management services.
In February, FLNG received approval for a $375 million term loan and a revolving credit facility for $125 million. This facility might be used to refinance the existing credit facilities for the vessels Flex Endeavour, Flex Ranger, and Flex Rainbow.
In the fiscal 2021 fourth quarter, ended Dec. 31, 2021, FLNG's vessel operating revenues increased 70.1% year-over-year to $114.59 million. Its operating income grew 112.9% year-over-year to $77.28 million. FLNG’s adjusted EBITDA amounted to $95.50 million for the fourth quarter. The company’s net income and earnings per share came in at $69.43 million and $1.30, respectively, registering 168.9% and 170.8% increases from the prior-year period.
FLNG pays $3.00 as dividends annually, yielding 10.4% at its current share price.
The stock’s price has improved 30.3% year-to-date and 225% over the past year. It closed Friday's trading session at $28.92.
FLNG’s POWR Ratings reflect a strong outlook. It has a grade of A for Momentum and a B for Sentiment. It is ranked #79 of 96 stocks in the B-rated Energy - Oil & Gas industry.
Click here to see FLNG’s POWR Ratings for Stability, Value, Growth, and Quality.
BP shares were trading at $30.03 per share on Monday afternoon, down $0.44 (-1.44%). Year-to-date, BP has gained 13.90%, versus a -6.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
Diversify Your Dividend Portfolio with These 3 High-Yield Foreign Oil & Gas Stocks StockNews.com
