5 Stocks For Finding Stable & High Yields In The Energy Sector

Even after oil prices were cut in just six months, recent negative press, a string of dividend cuts and fear-mongering have investors continuing to sell everything oil-related. In spite of this, there are still some underrated plays on the beaten down oil industry that can provide investors with stability and income in this time of uncertainty.

The oil industry just can’t catch a break.

Let’s start with the negative news — Last week, a CSX (NYSE: CSX) train carrying crude oil derailed in West Virginia, with 14 railcars going up in flames. Interestingly enough, this came just a few days after a Canadian National Railway (NYSE: CNI) train transporting 100 tanks of crude derailed in Ontario, Canada.

Although neither of these derailments have anything to do with supply or demand, or even the price of oil, it’s still a big negative for an industry that can’t seem to stay out of the news.

This comes after a string of high-profile dividend cuts, exaggerated by the fear of more dividend cuts.

The big dividend cuts that investors are focusing on came from Linn Energy (NASDAQ: LINE)LinnCo (NASDAQ: LNCO) and Breitburn Energy Partners (NASDAQ: BBEP). These guys were big time dividend payers, offering 20% plus dividend yields heading into 2015.

But the main reason for the steep dividend yields was the fact that their stock prices had taken a beating, following the price of oil sharply lower. And with oil prices falling, the three companies were seeing their cash flow dwindle.

You see, they generate a large part of their income from upstream oil and gas activities, where they profit from the exploration and production of oil. But with oil prices being cut in half, the amount of exploration and production activity is grinding to a halt.

But have no fear.

There are still opportunities to collect a steady dividend check, while still keeping your exposure to the energy industry intact. Without a doubt, any conversation of dividends and oil can’t be had without talking about the midstream part of the market; specifically, the MLPs that operate pipelines.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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