Historically, the largest integrated energy majors have been great places for investors to find steady streams of income and dividends. Firms like Royal Dutch Shell (RDS-A ) (RDS-B ) or Exxon (XOM ) have managed to leverage their immense size and asset bases to create enviable cash flows. With so much extra cash floating around, they can’t help but return some of it to investors.
The problem is that over the last few years, they haven’t been making as much. With oil prices sinking like a stone, big oil was hurt in a big way.
While some energy firms took the necessary steps to cut their payouts and live within their means, others took a far riskier approach – spending cash on hand, selling assets and even going into debt – to keep their payouts humming along. This had many investors spooked, and left many questioning whether the sector should really be considered a dividend seekers paradise.
However, with recent moves in the oil patch, the biggest stocks in the energy sector may actually have the last laugh.