WTI up 40 cents at $51.93.
From Barron's Focus on Funds:
Oil prices have stabilized near $50 a barrel over the past month, giving lift to shares of dividend-paying energy shares.
Index-tracking Vanguard Energy ETF (VDE) bested the S&P 500 by 1.5% in February. Part of the appeal likely has to do with the fact that energy companies including ExxonMobil (XOM) and Chevron (CVX) look like juicy dividend plays, but research firm Markit warns that the bet could sour if beaten-down energy companies cut their dividend payouts. Simon Colvin, research analyst at Markit, warns bottom-seeking investors that they might be buying their way into a “yield trap.”
“Energy shares are disproportionately represented among the companies offering an attractive dividend yield compared to long term average. But several of the energy firms which offer attractive yields are expected to cut payments, according to Markit’s dividend forecasts.“Here’s the key: Markit finds that that fully one-quarter of companies with the most attractive yields come from the energy complex. Markit screened the 31 energy stocks that boast the best dividend yield payouts, relative to their average.
Within this group, the Markit forecasts that handful of companies will suspend their payments altogether, based on a mix of announced cuts and foretasted payments. These include Comstock Resources (CRK), GulfMark Offshore (GLF) and Exco Resources (XCO)....MORE
