Dear Mr. Berko: For many reasons, I think oil and gas is going to move up later this year and in 2017. We have $60,000 in our joint account to speculate with. We want to buy a portfolio of seven or eight oil and gas stocks that will yield at least a 9 percent dividend. We know this is speculative, but we think there’s a better chance of success if you pick the stocks versus our picking them. We can afford the risks, and we won’t hold you responsible if they don’t do well.
— TR, Buffalo, N.Y.
Dear TR: I only recommend these rank speculations to investors who can complete six of the following eight personal requirements. You must be able to gargle with battery acid, leap over tall buildings, chew Coke bottle glass, do pushups on a bed of nails, travel faster than a speeding bullet, digest a Carolina Reaper, have open-heart surgery without anesthesia and place among the top five contestants in the Illinois State Fair hog calling contest. If you can do six of those, then the following picks were chosen just for you by Nigerian President Muhammadu Buhari, Venezuelan President Nicolas Maduro, Brazilian President Dilma Rousseff and Goldman Sachs.
BP PLC (BP-$34), a $211 billion-revenue integrated oil and gas company across the pond, provides its gas stations with fuel, gives businesses and homes energy for heat and light, and makes lubricants and petrochemicals used to make thousands of everyday plastic items. BP should earn $1.23 a share this year, and in 2017, with revenues of $255 billion, earnings could come in at $2.70 a share. The $2.40 dividend yields 7.3 percent and is sustainable, considering BP’s impressive cash flow.
Royal Dutch Shell (RDS-B-$53), a $250 billion integrated oil and gas company, has a mailing address in the Netherlands. It operates much the same as BP. Its $3.76 dividend, yielding 9.1 percent, is sustainable, considering expected 2017 revenues of $335 billion and a strong free cash flow.
