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The energy sector has traditionally been a darling of income-focused investors. Many stocks in this sector, especially in the Oil & gas sector, yields good dividend while also continuing to appreciate your capital. We had discussed some of these stocks in our articles before. In this one, I am going to take a look at three oil & gas sector stocks and their dividend yields, especially in the light of the latest earnings releases.

The stocks I have picked not only have attractive dividend yields, but also have potential for long-term capital appreciation. Although recent weakness in oil and gas prices have had a negative impact on the financial results of the three oil companies I am focusing on today, the long-term outlook for oil is bullish and this augurs well for these companies. In addition, the companies I have picked have P/E ratios below Industry average, therefore their valuation looks attractive. Here are my picks:

Chevron Corp. (NYSE:CVX) shares have seen a pullback in the last few trading sessions after the San Ramon, California-based oil and gas giant reported lower earnings and revenue in the third quarter.

Weak Q3 Results

CVX reported third-quarter earnings of $2.69 per share, which is significantly below the $3.92 per share reported by the company for the same period in the previous year. Revenue for the quarter fell nearly 10%. Both earnings and revenue fell short of Street estimates.

CVX, like other oil and gas majors, saw its oil and gas production decline in the third quarter. Lower-than-expected oil and gas prices further hurt CVX's results.

High Dividend Yield

While Chevron's disappointing results led to a sharp drop in the company's shares, the pullback is a good opportunity to buy CVX shares. CVX currently has a dividend yield of 3.30%, which is higher than that of rival Exxon Mobil Corp. (NYSE:XOM). The company has a strong balance sheet, with cash balance at over $21 billion. Although the company's capital expenditures are expected to continue to rise, it should not have any impact on dividend payments.

Chevron has a P/E ratio of 8.96, compared to XOM's 9.59 and the Industry average of 10.75.

Should You Buy Chevron?

While third-quarter results were disappointing, the company does have a robust project pipeline. The company's third-quarter results were also impacted by lower oil and gas prices. While oil prices may remain under pressure in the next few months, the long-term outlook is bullish. With a dividend yield of 3.30% and a strong balance sheet and project pipeline, CVX is a good option for income investors.

ConocoPhillips (NYSE:COP), a Houston, Texas-based company engaged in exploration and production of oil and gas, is another major player in the oil and gas sector with high dividend yield. Although COP is not as large as CVX and XOM, the company is a major player in the global oil and gas industry.

COP also primarily focuses on upstream operations since spinning off its downstream operations, Phillips 66 (NYSE:PSX), earlier this year.

Generous Dividend Yield

COP currently has a dividend yield of 4.59%, which is one of the highest among dividend paying major oil and gas companies. COP has a forward P/E multiple of 10, which is in-line with the Industry average.

Q3 Results Hit by Lower Energy Prices

Like CVX and other major oil and gas companies, COP's third-quarter results were hit by lower oil and gas prices. The company's profit for the quarter was $1.8 billion, or $1.46 per share. Excluding one-time items, COP reported adjusted earnings of $1.44 per share, beating analysts' estimates of $1.19 per share.

COP's production during the third quarter of 2012 came in ahead of Street expectations. The company is boosting its production in unconventional oil-rich shale formations. In the third quarter, the company's output from its Bakken and Eagle Ford shale projects doubled from last year.

My Take on COP

Like CVX, COP has a strong balance sheet. The company is in the middle of a three-year restructuring program, which is aimed at boosting its balance sheet. The spin-off of Phillips 66 was part of this program.

COP's production beat estimates in the third quarter and is expected to rise in the fourth quarter. The company's plans to improve its balance sheet are also progressing well. Add to all this the attractive dividend yield, and you have a good buy in COP.

BP Plc (NYSE:BP), the U.K.-based oil and gas major, is the final oil and gas major I want to focus on today. Now, BP has had its fair share of problems since the Gulf of Mexico oil spill in 2010. However, the attractive dividend yield and some recent developments make BP worth a look.

Dividend Yield

BP currently has a dividend yield of 5.11%. In fact, the company's Board of Directors last month raised quarterly dividend by 13%, a sign that the company is confident about its future.

BP is trading at a P/E (NYSE:TTM) ratio of 5.54, which is significantly below the industry average. The discount reflects the turbulent period BP has been through. However, the tough period BP has been through is showing signs of ending.

CEO Bob Dudley said, "BP's performance and the strong progress we are making in transforming the company give us the confidence to increase distributions to our shareholders."

Rosneft (OTC:RNFTF) Deal

One of the uncertainties surrounding BP was its partnership with TNK in Russia. However, the cash and shares deal with OAO Rosneft has ended much of that uncertainty.

Deepwater Horizon Oil Spill

BP recently said that it is in ongoing discussions with the U.S. Department of Justice and other federal agencies regarding possible settlement of the claims related to the Deepwater Horizon oil spill in the Gulf of Mexico. BP noted that while it is ready to settle on reasonable terms, a number of unresolved issues remain.

Source: Large Cap Oil And Gas Stocks With High Dividend Yields