TotalEnergies (TTE +0.14%) is a proven survivor in the oil patch. It is also an innovator that has started to include electricity production in its energy portfolio. The current geopolitical tension in Venezuela and elsewhere could cause some disruption to the energy market, but it won't stop me from continuing to buy TotalEnergies' stock.
Energy prices have always been volatile
While some theorists claim that Wall Street is efficient, the truth is that it can be highly emotional over short periods. That's been highlighted recently with the events in Venezuela, which have investors worried about what might happen to the oil market. However, oil market-moving events aren't actually uncommon, despite the dramatic nature of the current happenings. Oil is a highly volatile commodity, not just some of the time, but all of the time.
Image source: Getty Images.
This is one of the reasons why most investors looking at the energy sector should probably stick with the largest and most diversified companies. That basically means integrated oil giants like ExxonMobil, Chevron, Shell, BP, and TotalEnergies. For me, TotalEnergies stands out from the pack.
Why TotalEnergies is still my pick
Like its peers, TotalEnergies has exposure across the entire energy value chain, which helps smooth the effect of commodity price volatility. However, it has also been investing in electricity, further diversifying the mix.
BP and Shell made similar commitments, but they have both walked back their earlier goals. BP and Shell cut their dividends to accommodate the lofty clean energy plans they later abandoned. TotalEnergies made the same clean energy shift, but didn't cut its dividend. I'm a dividend investor, so TotalEnergies' commitment to its dividend, which has been increased regularly, is right up my alley. The yield is a very attractive 5.6%.
NYSE: TTE
Key Data Points
The hidden benefit TotalEnergies offers
For most investors, Exxon (3% yield) or Chevron (4.1%) will probably be solid energy picks, as both have decades of annual dividend increases behind them. However, I'm willing to take on some additional risk for a higher yield. Not only is TotalEnergies more diversified with its push into electricity, it also has a long history of successfully operating in markets other energy companies avoid, including a broad presence in Africa.
Emerging market opportunity adds to the allure for me and highlights TotalEnergies' ability to operate in challenging political environments. I'm happy to let my dividends reinvest, buying more TotalEnergies with each quarterly dividend payment, even amid the events unfolding in the energy market today.
