I’m a big believer in dividend stock buying and selling. Not in the stock itself, but in how dividends are paid and the company itself. The energy dividend stock is one of those stocks that comes with a lot of potential upside and a lot of downside. If you are looking for the next big energy company to buy, you can find dividend stocks today with the aid of our dividend stock search engine to give you the best options.
The energy stock has been going in and out of the green a lot of times lately. It’s been underperforming the S&P for the past couple of years so maybe the dividend is right. Our top energy stock of 2019 list is here.
Another dividend stock you should check out is the sempra energy stock. The company has recently been underperforming the SampP in its energy industry and its been looking a little bit down lately. As of now the stock is up about 2.5% and the dividends are reinvested in the company.
Well, that’s one way of looking at it. Another way of looking at it is the fact that many energy stocks are heavily cyclical and a dividend can be seen as a hedge when energy prices are low.
The company has been down in the last year while the energy industry has been up. The stock has been up over 40 percent but the energy industry is up over 100 percent. That is why a dividends can be a good hedge when the energy sector is down.
Energy is a cyclical industry and a dividend can be a good hedge. But it is not a hedge when the energy industry is up. That is the case with Sempra Energy, as well as many other energy companies. I have been on the receiving end of very large dividends during the last year. Some of them have been over $100 million dollars. And so, as we can see, even though Sempra Energy is up, its earnings are down.
At the same time, as we have recently learned that nobody in his right mind could use his energy in the future, the dividend may be the best hedge for those who want to use it.
That being said, one of the biggest problems in the energy industry is that you cannot just dump your energy without going through a process for the next five years or more to actually generate it. And that process is what a hedge is. A hedge is a mechanism to prevent a company from taking advantage of that energy. So Sempra Energy, as an investor, is hedging their risk. And hedge funds that invest in energy companies are the best hedge funds out there.
Yes, you mentioned that your name is now on the Sempra Energy hedge fund, but that is only one part of this hedge. The other is that it will also invest in other Sempra Energy companies. Which is to say that the hedge fund will buy into shares of the energy companies that are part of the Sempra Energy portfolio. In the case of Sempra Energy specifically, it will buy into shares of their subsidiary, Encore Energy.
The Sempra Energy hedge fund will invest in the stock of Encore Energy, so their hedge fund will buy into the Encore Energy shares. This means that they will also invest in the shares of Sempra Energy stock, and of course the hedge fund’s share in Encore Energy shares is also part of the hedge fund’s hedge. This makes it possible for them to buy shares of Sempra Energy’s stock, making it an extremely liquid hedge fund.