Energy. The world uses a lot of it. And despite the efforts to add renewables like solar and wind to the mix, fossil fuels still run the show. Demand remains steady and is showing no real overall signs of abating. For the firms that produce oil and natural gas, this steady demand has managed to provide plenty of cash flows. And if you happen to be a strong low-cost producer—like our latest Best Dividend Capture Pick—the steady demand can also provide plenty of dividend and shareholder rewards as well!
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
The secret to our pick’s success remains its operating area. Our pick is an exploration & production (E&P) stock. Operating in the upstream segment of the energy sector, our new pick physically goes out and drills for oil and natural gas, and its profits are based on the price of oil minus its drilling costs. But lucky for our new pick, its drilling costs happen to be some of the lowest in the business. That’s due to its first-mover status into some of North America’s most prolific shales very early in the fracking revolution. This has allowed it to pull copious amounts of oil and natural gas at very low prices.
That’s ultimately driven by its long history of rewarding shareholders with dividends, buybacks, and special dividend payments.
The best part is that our pick has continued to find new ways to grow as well. This has included using some innovative drilling techniques and technology to enhance what it can pull from a well. This includes carbon capture & storage projects that use spent carbon to boost well production, all of which lowers the firm’s costs. Speaking of those costs, our pick has also continued to improve its balance sheet, smartly using debt when rates were low and kicking out maturities far into the future. This limits our pick’s interest rate risk.
With its growth, cash flows, and conservative management, our pick has continued to find investors’ support. As such, it has become a wonderful dividend capture play. A dividend capture strategy involves buying a stock before its ex-dividend date and then selling it after it has recovered the payout. With an ex-dividend date of Friday, January 17, our pick is primed for the strategy, as is evident from its historical track record of a recovery period within an average of 10.9 days after going ex-dividend.
For investors looking for a quick total return of income and capital appreciation, our latest energy play could be a lucrative option.
