JPMorgan Says Oil Could Go to $125 in 2022: Buy These 4 Energy Dividend Giants Now

24/7 Wall St.
24/7 Wall St.
 2021-11-30 After a very sharp rise since the summer, oil was hammered on Friday during the huge sell-off due to the Omicron variant. While the “black gold” roared back over the $70 level on Monday, reclaiming about half of the Friday losses, if one firm is right, this may be one of the last times for a while you see oil at this level. That doesn’t bode well for consumers already plagued by rising inflation.

A new and somewhat provocative report from the analysts at JPMorgan is titled: "OPEC+ 'Show me the Barrels'; $150/barrel on the horizon as capacity shocks." The case is made in this report that not only is oil going higher, but it potentially could go much higher over the next two years:

We see long-term $80/barrel Brent (real) as the marginal cost to deliver a balanced market in 2024 and beyond. Incorporating our model of OPEC+ true capacity, we expect oil to overshoot to $125/barrel in 2022 and $150/barrel in 2023.

While the possibility that the extreme pain for consumers could be more on the front end, the reality is that it makes sense to buy the big dividend-paying energy giants now as a hedge against a massive rise in 2022 and 2023.

We screened our 24/7 Wall St. database looking for the best dividend-paying energy stocks rated Buy at major Wall Street firms and found four that are cheap and have some serious upside potential. We focused on companies that are rated Buy, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.


This is one of the premier European integrated oil giants, and Goldman Sachs is very positive on the shares. BP PLC ( NYSE: BP ) engages in the energy business worldwide. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture, usage and storage.

The company is also involved in the convenience and mobility business, which manages the sale of fuels to wholesale and retail customers, convenience products, aviation fuels, and Castrol lubricants. It is involved in refining, supply and trading of oil products, as well as operation of electric vehicle charging facilities. In addition, it produces and refines oil and gas, and it invests in upstream, downstream and alternative energy companies, as well as in advanced mobility, bio and low carbon products, carbon management, digital transformation and power and storage areas.

BP stock comes with a 4.83% dividend yield. The Goldman Sachs price target for the domestic shares is $45, which compares with the $35.22 consensus target. The final trade Monday was reported at $26.18 a share.
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This energy giant is a solid way for investors who are more conservative to be positioned in the sector. Chevron Corp. ( NYSE: CVX ) is a U.S.-based integrated oil and gas company, with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals. The company sports a sizable dividend, and it has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG).

With the strongest financial base of the majors, coupled with an attractive relative asset base, many on Wall Street feel that Chevron offers the most straightforwardly positive risk/reward. Although current conditions do not warrant a large focus on production growth, Chevron possesses numerous medium-term drivers that should support production levels in the coming years.

Currently, shareholders receive a 4.67% dividend, and analysts feel comfortable it will remain at current levels. BofA Securities has a price target of $135 for Chevron stock. The consensus target is $128.65, and Monday's final trade was reported at $114.85 per share.
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Exxon Mobil

Shares of this mega-cap energy leader have backed up nicely and still offer investors an excellent entry point. Exxon Mobil Corp. ( NYSE: XOM ) is the world's largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.

The company announced last month that ExxonMobil Catalysts and licensing has introduced ExxonMobil Renewable Diesel (EMRD) process technology to help meet the evolving needs for mobility, while utilizing renewable feedstock. This new process technology converts feedstocks including, but not limited to, vegetable oils, unconverted cooking oil and animal fats, into renewable diesel. Due to significant interest in producing renewable jet fuel as a primary product, Exxon is also developing advanced catalyst and process technology solutions that will offer EMRD process licensees flexibility to tailor the amount of jet fuel versus diesel produced.

The company pays a huge 5.72% dividend, which will continue to be defended. The $90 BofA Securities price target is well above the $71.52 consensus target. Exxon Mobil stock closed trading at $61.59 on Monday.


This French integrated giant is another great way to play an energy rally from the European side. TotalEnergies S.E. ( NYSE: TTE ) operates as an integrated oil and gas company worldwide. Its Exploration & Production segment is involved in oil and natural gas exploration and production activities in approximately 50 countries.

The company's Integrated Gas, Renewables & Power segment engages in the LNG production, shipping, trading and regasification activities; trading of liquefied petroleum gas (LPG), petcoke and sulfur, natural gas and electricity; transportation of natural gas; electricity production from natural gas, wind, solar, hydroelectric and biogas sources; energy storage activities; and development and operation of biomethane production units, as well as provides energy efficiency services.

The Refining & Chemicals segment is involved in refining petrochemicals, including olefins and aromatics; and polymer derivatives, such as polyethylene, polypropylene, polystyrene and hydrocarbon resins, as well as biomass conversion and elastomer processing. This segment also engages in trading and shipping crude oil and petroleum products.

The Marketing & Services segment produces and sells lubricants; supplies and markets petroleum products, including bulk fuel, aviation and marine fuel, special fluids, compressed natural gas, LPG and bitumen; and provides fuel payment solutions. It operates approximately 15,500 service stations.

Investors receive a 5.54% dividend. Piper Sandler has set a $66 price target. The consensus target for TotalEnergies stock is $61.38. The shares closed trading on Monday at $46.50 apiece.
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All four of these mega-cap integrated leaders pay very solid dividends and have some serious upside to their various price targets. Plus, they all dominate in their geographical locations and perhaps offer more safety for investors with less risk tolerance. Most importantly, the massive selling last Friday provides an incredible entry point for investors looking for energy exposure and income.

One caveat for investors considering the two European ideas is that many foreign governments automatically withhold taxes on dividends paid by companies incorporated within their borders. This means that a certain percentage of your dividend may be withheld by your broker.

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