3 High-Yield Dividend Oil & Gas Stocks Near 52-Week Lows to Buy in September

Many oil and gas stocks have retreated now that West Texas Intermediate crude (the US benchmark) is hovering around $74 a barrel. Oil prices were under pressure due to concerns about slowing global economic growth and rising OPEC+ supply.

Integrated energy major Chevron (CVX -1.68%) as well as exploration and production companies The energy of chords (CHRD -2.20%) and APA Corp. (WATER -2.81%) they are 7% off their 52-week lows. Here’s why sales in every dividend stock could be a buying opportunity.

Image source: Getty Images.

This best-in-breed major oil also has a high yield

Daniel Foelber (Chevron): Chevron has been a remarkably stable stock to own in 2024 — with the stock price remaining fairly limited between $140 per share and $165 per share. But while his equal ExxonMobil knocking on the door of an all-time high, Chevron is only 6% off its 52-week low.

The stock looks like a fair value here. The chart shows that profits have fallen from peak levels a few years ago and are now closer to pre-pandemic levels. But so is the share price.

CVX data by YCharts

However, Chevron is probably better positioned now than before the pandemic, improving the quality of its earnings. The company has simplified its oil and gas portfolio by focusing on areas with a low cost of production, such as the Permian Basin in western Texas and eastern New Mexico. Chevron is also investing in low-carbon efforts to diversify its business and reduce its reliance on fossil fuels.

Leverage ratios such as debt-to-equity and debt-to-financial-equity are also lower now than before the pandemic because Chevron used huge profits to pay down debt. It exited the last quarter with just over $4 billion in cash and cash equivalents and $23.2 billion in total debt, which is low for a company of Chevron’s size. For context, Chevron spent about $6 billion on dividends and buybacks last quarter, which puts into perspective just how manageable its debt position is.

With a yield of 4.4% and 37 years of consecutive dividend increases, Chevron stands out as a reliable stock to grow your passive income this fall and for years to come.

One of the few Bakken companies focused on land with massive returns

Lee Samaha (String energy): There is a reason why some oil companies – namely, Chord Energy, Devon Energyand Vitesse Energy — have underperformed this year even as oil prices have remained relatively high and other peers have outperformed. And it probably boils down to market sentiment toward the Bakken oil field. Simply put, all three of these companies have acquired assets there.

The market didn’t like Devon Energy’s announced deal to buy Grayson Mills’ Williston Basin (Bakken) assets. Similarly, Vitesse Energy’s agreement to acquire $40 million in assets in the Williston Basin left the market unimpressed. Finally, Chord Energy’s agreement to combine with Enerplus Corp. to create a “premier operator of the Williston basin” did not set the world on fire.

The pessimism comes from the fact that production growth in US non-Permian Basin assets appears to be challenging.

Total oil production data from the Permian region, according to YCharts

However, the sale seems overdone. For example, Chord expects $1.2 billion in adjusted free cash flow (FCF) in 2024, representing about 13% of its market cap. Furthermore, when announcing the Enerplus deal, management said: “The pro forma inventory supports approximately 10 years of development at the current rate.”

A 13% FCF yield means the company will generate its market cap in FCF in less than eight years. With at least a decade of development ahead, Chord Energy appears undervalued, provided oil prices remain relatively high.

An A-OK way to grease the wheels of your passive income machine

Scott Levine (APA Corp.): You don’t have to be an investor with decades of experience to recognize that sometimes the market consistently punishes stocks unfairly. That appears to be the case with APA Corp., which is now trading just 6% off its 52-week low.

While the company failed to meet analysts’ earnings expectations in the first and second quarters of 2024, APA delivered some impressive results in other respects and looks well positioned to continue to perform well. All of this adds up to an excellent buying opportunity for patient investors who are willing to let the stock recover over time — while collecting passive income from the stock’s 3.5% dividend yield.

Engaging in exploration and production activities in South America, Guyana, Suriname and the North Sea, APA strengthened its portfolio with the recent acquisition of Callon Petroleum in a transaction valued at approximately $4.5 billion. Thanks to the acquisition, APA increased its presence in the Permian Basin by adding 145,000 net acres in total. Management expects to recognize synergies from the acquisition as well as increased free cash flow — an encouraging sign for income investors as APA management aims to return at least 60% of free cash flow to investors in the form of dividends and share repurchases .

Valued at 2.4 times operating cash flow, APA stock currently trades at a discount to its five-year average cash flow multiple of 2.8. With the stock hanging on the discount shelf, now is a great time to gas up this upstream power stock.