The energy sector provides significant opportunities for high yield dividend stocks and dividend growing stocks. The energy sector has a combined dividend yield of 3.51% and an annual dividend increase of 55% in the current year compared to the prior year. The energy stocks discussed below have a positive outlook with high dividend yields and potential for growing dividends in the future.
Pioneer Southwest Energy Partners L.P. (PSE) engages in the production of oil and gas in the United States. PSE just increased its quarterly dividend to $0.52 for an annual dividend yield of 7.49%. PSE's dividend payout ratio is only 55% so there is plenty of room to continue to raise dividends in the future years. PSE has a large inventory of remaining oil drilling locations in the Spraberry field, with approximately 100 40-acre locations and 1,200 20-acre locations. The 2012 drilling program reflects increasing the rig count from two rigs to three rigs, which is expected to result in 55 to 60 wells being drilled during the year. PSE's stock price is up 7.33% year to date. PSE has an equity summary score of 10 out of 10 for a VERY Bullish outlook.
Royal Dutch Shell plc (RDS.A) operates as an oil and gas company worldwide. The company explores for and extracts crude oil and natural gas. RDS.A has a current dividend yield of 4.91% and a 5-year average annual dividend growth rate of 5.26%. We see production rising over the next four years, after eight years of decline. In 2011, RDS doubled its LNG capacity through Qatar and Russia, and expanded Canadian oil sands production while fully integrating it into its U.S. downstream. RDS will look to expand its gas-to-liquids (GTL) markets (particularly in China). RDS.A has an equity summary score of 9.2 out of 10 for a Very Bullish outlook.
Enterprise Products Partners (EPD) provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLS), crude oil, refined products, and petrochemicals in the United States, Canada, and Gulf of Mexico. EPD has a current dividend yield of 4.8% and a 5-year average annual dividend growth rate of 6.06%. While EPD increased its cash flow distribution by 6.36% in the past year, it also deployed cash in various fee-based development projects that will likely generate operating cash flow to support its future distribution growth. EPD's stock price is up 14.1% year to date. EPD has an equity summary score of 8.9 out of 10 for a Bullish outlook.
ONEOK Partners (OKS) engages in the gathering, processing, storage, and transportation of natural gas in the United States. OKS has a current dividend yield of 4.54% and a 5-year average annual dividend growth rate of 5.32%. OKS increased its cash flow distribution by 11.40% in the past year. We have a positive view of the partnership's growth prospects. OKS has allocated $2.7 billion to $3.3 billion for growth projects between 2011 and 2014. We expect OKS' natural gas liquids segment to benefit from higher fee-based earnings due to increased NGL volumes and higher optimization volumes as a result of increased fractionation capacity. OKS has an equity summary score of 8.5 out of 10 for a Bullish outlook.