There’s a simple equation for investors in any sort of commodity producing stock. And that’s the price of the commodity minus your costs equals your profits. It doesn’t matter if you’re talking about corn, copper or coal, that basic equation holds true. Unfortunately, for investors in the energy patch, they know this fact all too well.
Thanks to the combination of the trade war and now the coronavirus, demand for oil has cratered. Naturally, that’s sent prices careening toward lows not seen in decades. This has hit energy stocks right in the pocketbook. We’ve already seen several dividend and production cuts from the sector.
The problem is that it’s only going to get worse.
With OPEC still fighting and now President Trump looking to sanction key producers, the mess in the energy sector doesn’t look like it will abate anytime soon. For dividend investors, that could make the industry a no-go for the near to medium term.
Find out more about energy stocks here.
