5 Highest Yielding Oil Stocks For The Ultimate Retirement Portfolio

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Includes: BWP, NGLS, NRP, NS, TCP
by: Efsinvestment

As oil has come down $82 a barrel, there is an opportune environment in the oil and gas sector. It is essential to pick high-yielding stocks with strong upside potentials. Therefore, I have listed five highest-yielding oil and gas companies that are priced with low P/E ratios. All of the companies offer a minimum 6.9% dividend yield. I have added my O-Metrix Grading System where possible. Here is a fundamental analysis on the top five oil & gas companies (Data obtained from Finviz/Morningstar and is current as of Aug 19):

Boardwalk Pipeline Partners (NYSE:BWP): Boardwalk Pipeline has recently announced its Q2 2011 results. As of Aug 19, the company was trading at a P/E ratio of 19.8, and a forward P/E ratio of 17.1. Analysts expect the company to have a 2.7% annualized EPS growth in the next five years, which is reasonable given the 6.21% EPS growth of past five years. With a profit margin of 21.5%, Boardwalk offered a 8.42% dividend last year.

O-Metrix score of the company is 3.01, while earnings increased by 74.92% this year. Insiders own 53.42% of the stock. Boardwalk returned -19.4% in a year, while it is currently trading 22.62% lower than its 52-week high. Yields are perfectly consistent. Although debts are increasing, assets outrun them. Debt-to equity ratio is 0.9, far better than the industry average of 3.5. It has been a rough year for Boardwalk Pipeline, but I believe that it will outperform in the future. Recent dividend history per share is as follows:

Aug 9, 2011

$0.525

May 10, 2011

$0.523

Feb 15, 2011

$0.52

Oct 28, 2010

$0.515

NuStar Energy (NYSE:NS): NuStar has just agreed on constructing a rail offloading facility with EOG Resources (NYSE:EOG) in Louisiana. The Texas-based NuStar shows a trailing P/E ratio of 18.3, and a forward P/E ratio of 16.7, as of the Friday close. Estimated annual EPS growth for the next five years is 1.9%. Profit margin was 4.7% last year, while shareholders enjoyed a 7.66% dividend.

The stock is currently trading 16.42% lower than its 52-week high, whereas sales increased by 41.27% this quarter. NuStar has an O-Metrix score of 2.73, and it returned -1.2% in the last twelve months. Target price is $66.50, indicating an about 16.2% upside movement potential. Debt-to assets ratio is strolling around 40% since 2006. Yields are perfect. Insiders have been buying stocks for a while. I would not ignore this company. Here are the recent dividend payments of NuStar Energy per share:

Aug 5, 2011

$1.095

May 5, 2011

$1.075

Feb 4, 2011

$1.075

Oct 28, 2010

$1.075

Natural Resource Partners (NYSE:NRP): Natural Resources recently announced that it has amended and restated one of its credit facilities. As of Aug 19, Natural Resource was trading at a P/E ratio of 15.2, and a forward P/E ratio of 14.2. Five-year annual growth forecast is 4.0%. Profit margin (53.9%) crushes the industry average of 11.5%, while the company offers an attractive dividend yield of 7.83%.

Natural Resource had an EPS growth of 27.69% this quarter, and 31.82% this year. It has an admirable gross margin of 99.7%, and an operating margin of 66.9%. Insider transactions for the last six months have increased by 470.48%, whereas the stock is currently trading 24.51% lower than its 52-week high. The company has a 4.02 O-Metrix score, and it returned 6.6% in a year. Target price is $35.60, implying a 28.9% upside potential. Analysts give a 1.5 recommendation for Natural Resource (1=Buy, 3=Sell). Recent dividend history is:

Aug 3, 2011

$0.54

May 3, 2011

$0.54

Feb 2, 2011

$0.54

Nov 3, 2010

$0.54


Targa Resources Partners (NYSE:NGLS): Targa will
participate in the Citi Master Ltd. Partnership Conference. The Texas- based Targa shows a trailing P/E ratio of 18.1, and a forward P/E ratio of 17.8, as of Friday’s close. Analysts expect the company to have a 7.5% annual EPS growth in the next five years. Profit margin in 2010 was 2.4%, while it offered a 6.92% dividend.

Targa returned 26.6% in the last twelve months, whereas earnings increased by 133.51% this quarter. Institutions own 42.09% of the stock, while it is trading 8.19% lower than its 52-week high. Target price is $38.83, indicating an about 17.7% increase potential. Debt-to assets ratio is in a free fall since 2008. Sales increased by 39.42% this quarter. Debt-to equity ratio is 1.0, far better than the industry average of 3.5. O-Metrix score of the company is 4.01. 7 out of 12 analysts recommend buying, and 2 suggests outperform. Targa can be added to portfolios after a pullback. Here are the recent dividend payments of the company per share:

Jul 19, 2011

$0.57

Apr 19, 2011

$0.558

Feb 1, 2011

$0.548

Oct 14, 2010

$0.538

TC PipeLines (TCLP): TC PipeLines recently reported its Q2 2011 results. The company has a P/E ratio of 12.9, and a forward P/E ratio of 13.0, as of Aug 19. Estimated annualized EPS growth for the next five years is 4.0%, which is reasonable when its 1.48% EPS growth of the past five years is considered. Profit margin (77.4%) crushes the industry average of 4.1%, while it offers a gorgeous dividend of 7.39%.

The stock is currently trading 21.76% lower than its 52-week high, and it has an O-Metrix score of 4.39. Debt-to assets ratio is going down for the next five years, whereas it returned -2.6% in a year. Gross margin and operating margin are 93.7% and 83.9%, respectively. Institutions own 32.18% of the stock. Debt-to equity ratio is 0.3, way below the industry average of 3.5. Moreover, the company has a four-star rating from Morningstar. Returning serious profits is no sweat for TC Pipelines. Recent dividend payments are as follows:

Jul 27, 2011

$0.77

Apr 27, 2011

$0.75

Jan 27, 2011

$0.75

Oct 27, 2010

$0.75

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