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Friday was another disastrous day for the markets. Financials lost 3.5%, followed by Conglomerates (-3.4%), and Industrials (-3.4%). The relatively defensive Healthcare and Utility stocks lost -1.3% on average. Last week sent mixed signals to the market. Even after Friday’s losses, Financials made a small rebound, gaining 1.6%.

When we look at the one month performance, we observe that Basic Materials lost 15.3%, followed by Financials which lost 11.3%. In this volatile environment safety should be a number one priority. Low P/E dividend stocks can provide a soft cushion against market downturns. Here is a list of 8 energy stocks with nifty yields and priced with low P/E ratios. All of the listed stocks offer a minimum yield of 5%, and have a maximum P/E ratio of 15. The minimum market cap is $1 billion. (Data from finviz/morningstar, and is current as of September 30 close. You can download O-Metrix calculator, here.):

Alliance Holdings GP (NASDAQ:AHGP) is a producer and marketer of coal and coal-related products. The stock has a market cap of $2.63 billion, and is trading with a trailing P/E ratio of 13.70, and an even lower forward P/E ratio of 11.52. Analysts estimate 14% annualized EPS growth for the next 5 years. With a nifty yield of 5.30%, AHGP has an O-Metrix score of 7.92. Here is Alliance Holdings' dividend history:

Date

Amount

08/10/11

$0.5825

05/11/11

$0.5550

02/09/11

$0.5275

11/09/10

$0.5000

Alliance Resource Partners (NASDAQ:ARLP) is a partnership of Alliance Holdings. The company is also involved in the production and marketing of coal-related products. The stock has a market cap of $2.41 billion, and is trading with a trailing P/E ratio of 8.94, and an even lower forward P/E ratio of 7.79. Analysts estimate 10.6% annualized EPS growth for the next 5 years. With a nifty yield of 5.63%, ARLP has an O-Metrix score of 9.52. Here is Alliance Resource Partners’ dividend history:

Date

Amount

08/03/11

$0.9225

05/04/11

$0.8900

02/03/11

$0.8600

11/03/10

$0.8300

BP Prudhoe Bay Royalty Trust (NYSE:BPT) has a royalty interest in the Prudhoe Bay oil field. The stock has a market cap of $2.25 billion, and is trading with a trailing P/E ratio of 11.81. It is a low Beta stock with a Beta value of 0.67. While the stock lost 11.43% since January, it returned 9% in a year. With a nifty yield of 8.98%, BP Prudhoe Bay Royalty Trust is a nice stock for income investors. Here is BPT’s dividend history:

Date

Amount

07/14/11

$2.6424

04/13/11

$2.3933

01/12/11

$2.4080

10/13/10

$2.020

Natural Resource Partners (NYSE:NRP) is a coal producer and marketer with several operations in Appalachia, Northern Powder and Illinois Basins. The stock has a market cap of $2.69 billion and is trading with a trailing P/E ratio of 14.09, and an even lower forward P/E ratio of 13.21. Analysts estimate 4% annualized EPS growth for the next 5 years. With a nifty yield of 8.52%, NRP has an O-Metrix score of 4.63. Here is Natural Resource Partners’ dividend history:

Date

Amount

08/03/11

$0.54

05/03/11

$0.54

02/02/11

$0.54

11/03/10

$0.54

Pengrowth Energy Corporation (NYSE:PGH) is involved in production of oil and natural gas products in the Western Canadian Sedimentary Basin. The stock has a market cap of $2.92 billion, and is trading with a trailing P/E ratio of 12.83, and a forward P/E ratio of 13.83. Analysts estimate 7.2% annualized EPS growth for the next 5 years. With a nifty yield of 9.42%, Penn West has an O-Metrix score of 6.24. Here is the dividend history of Penngrowth Energy Corporation:

Date

Amount

09/28/11

$0.07

08/29/11

$0.07

07/27/11

$0.07

06/28/11

$0.07

Penn West Petroleum (NYSE:PWE) is involved in production of oil and natural gas products in North America. The stock has a market cap of $6.82 billion, and is trading with a trailing P/E ratio of 13.71, and a forward P/E ratio of 10.38. With a nifty yield of 7.29%, Penn West is trading at only 0.76 times its book value. Here is the dividend history of Penn West:

Date

Amount

09/28/11

0.27

06/28/11

0.27

03/29/11

0.27

12/29/10

0.09

SeaDrill Limited (NYSE:SDRL) is an offshore drilling contractor, headquartered in Bermuda with operations worldwide. The stock has a market cap of $12.85 billion, and is trading with a low trailing P/E ratio of 5.86, and a forward P/E ratio of 8.37. Analysts estimate 10.2% annualized EPS growth for the next 5 years. With a nifty yield of 10.90%, SeaDrill has an O-Metrix score of 15. Here is the dividend history of SeaDrill Limited:

Date

Amount

09/06/11

$0.75

06/06/11

$0.75

03/02/11

$0.486

03/02/11

$0.144

Sunoco Logistics Partners (NYSE:SXL) is an oil and gas pipeline operator headquartered in Pennsylvania. The stock has a market cap of $2.93 billion, and is trading with a trailing P/E ratio of 8.46, and a forward P/E ratio of 14.02. Analysts estimate 6.33% annualized EPS growth for the next 5 years. With a yield of 5.49%, Sunoco Logistics has an O-Metrix score of 5.35. Here is the dividend history of Sunoco Logistics:

Date

Amount

08/04/11

$1.215

05/05/11

$1.195

02/04/11

$1.180

11/04/10

$1.170



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 8 Energy Dividend Stocks That Can Provide A Soft Cushion Against A Market Downturn