VettaFi Head of Energy Research Stacey Morris says energy stocks have come under pressure due to recession concerns and a related decline in oil prices.
“From a fundamental perspective, things are still very constructive,” Morris said. “[Oil and natural gas] prices are still relatively strong, especially when you view them in the context of the last eight years or so.”
“Energy companies across the board are generating strong free cash flow. They’re returning that cash to investors through buybacks and dividends.”
Morris noted that dividend trends for midstream are positive. The underlying index for the Alerian Midstream Energy Dividend UCITS ETF was yielding 7.1% as of July 8. Beyond income, investors may also consider shifting energy exposure towards midstream given its defensive qualities in today’s volatile markets.
The Alerian Midstream Energy Dividend UCITS ETF provides exposure to midstream energy companies involved in the processing, transportation and storage of oil, natural gas and natural gas liquids in the US and Canadian markets.