3 אינטערנאַציאָנאַלע ענערגיע סטאַקס פֿאַר דיווידענדז און גראָוט

International stocks provide terrific companies for U.S.-based investors — including those seeking dividends. A number of international companies are listed on U.S. exchanges making access to them similar or identical to U.S. stocks. In addition, international companies often trade at discounts to their American counterparts, which means better value, but in the case of dividend stocks, better yields as well.

In this article, we’ll take a look at three international dividend stocks in the energy sector we like for both current yield and dividend growth potential. These stocks below all trade on American exchanges with U.S.-listed tickers.

Equinor Energizes Returns

Our first stock is Equinor (עקנר) , an energy company that is based in Norway. The company engages in exploration, production, transportation, refining and marketing of various petroleum and petroleum-based products, as well as other forms of energy. It operates internationally through six business segments that collectively run the full supply chain of petroleum-based products. In addition, it trades oil and gas commodities, electricity and emissions rights, wind and carbon capture storage products, and more. The company has more than 5 billion barrels of proved reserves of oil.

Founded in 1972, Equinor produces about $160 billion in annual revenue, and trades with a market cap of $119 billion.

The company’s earnings have been tremendously volatile over the years, which is no surprise, given it is heavily involved in exploration and production, as well as having leverage to the price swings of crude oil and natural gas. Indeed, there have been three years in the past 10, where Equinor posted negative earnings, but on the other side, the up moves have been sizable to help make up for that.

Perhaps there is no better example of this than 2022, where the company is expected to generate earnings of $7 per share, which is almost triple what it produced in 2021. Soaring oil and gas prices have helped Equinor immensely, but we note this volatility applies on the downside as well. As such, we’re now expecting annual earnings per share change of -7% from the enormous (and likely unsustainable) base of earnings for this year. Equinor will almost certainly see lower profits when oil prices normalize.

The company has paid variable dividends based upon earnings, so it doesn’t have a streak of increases to speak of. But it sports a 2.2% yield today, and this year’s payout is just 11% of earnings. That means the dividend should be safe under just about any circumstance for the foreseeable future.

Finally, we see the stock as extremely well priced, trading for just 5.3 times this year’s earnings, which is less than half our expected fair value. This tailwind from a rising valuation should more than offset negative earnings growth, and all told, we expect around 12% total annual returns in the years to come.

Tap Into Canadian Natural Resources 

Our next stock is Canadian Natural Resources (קנק) , which is a similar company to Equinor. Canadian Natural explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids. It offers a variety of petroleum-based products, as well as operates refining assets and pipeline systems. The company has billions of barrels of proved oil reserves, and more than 20 trillion cubic feet of proved plus probable natural gas reserves.

Canadian Natural was formed in 1973, generates more than $35 billion in annual revenue, and trades today with a market cap of $59 billion.

Like Equinor, Canadian Natural’s earnings have been quite volatile. The company has had two years of negative earnings in the past decade, but up and down moves have been sizable from year to year. Investors should keep in mind its leverage to oil and gas prices when considering earnings forecasts.

We see an unsustainably high base of earnings for this year of $8.50 per share as oil and gas prices have remained elevated for a long time. As such, we forecast -15% earnings movement in the years to come to normalize the company’s earnings. As mentioned, however, this will depend greatly on the future direction of oil and gas prices.

The dividend yield is quite good at 3.8% today, making Canadian Natural a strong dividend stock. The company has a six-year streak of increases today, and given the payout ratio is under 30% this year, we expect more years of dividend growth ahead.

Shares trade at about half of our fair value estimate of 12-times earnings, but with hugely negative earnings growth forecasted, we see expected total returns at just around 2% in the years to come.

Supplement With Schlumberger

Our final stock is Schlumberger (סלב) , a technology company that operates in the energy sector globally. The company operates through four divisions that collectively offer software, IT infrastructure services, consulting services, field development planning, data processing, pressure and flow-rate measurement, and a variety of other engineering and technical support.

Schlumberger was founded in 1926, produces about $27 billion in annual revenue, and trades today with a market cap of $49 billion.

Schlumberger has also produced volatile earnings in years past, particularly as the company has a wide variety of drilling customers. That means that when oil prices are weak, and drilling activity slows, so does Schlumberger. This year, drilling activity is reaching records and the company’s earnings are reflecting that. We see 9% earnings-per-share growth in the years to come as Schlumberger is nowhere near record earnings, as its rebound from Covid is still underway.

The yield is better than the market at 2.0%, and we see rapid growth from current levels given the dividend was cut recently and is in the process of being rebuilt. The payout ratio is just 37% for this year, so we see the payout as safe at current levels barring a massive collapse in drilling activity.

We see the stock as overvalued today, with shares trading for about 18-times this year’s earnings, against fair value of 14-times earnings. But this headwind should be more than offset by robust forecast earnings growth and the 2% yield, for total annual returns of about 6% going forward.

We like Equinor, Canadian Natural, and Schlumberger for their combination of current yield and dividend growth potential, so long as investors can stomach the natural volatility of commodities stocks.