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Risk in the Market Is Rising -- Are BP, Chevron, Occidental Rare Bargains?

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There's always stellar return out there somewhere -- you just have to dig for it. 

With the S&P 500 up almost 16% year-to-date, it might be hard to find bargain stocks. Meanwhile, jumping into safe assets for treasuries doesn't exactly provide great yield. The 10-year treasury yields 1.55%, one of the highest rates around the world for 10-year safe paper. That fully prices in more than one Federal Reserve interest rate cut for 2019, as the benchmark rate is still above 2%. So treasury prices don't necessarily have huge upside from here. 

Naturally, some will look to dividend stocks, which, in the U.S., can yield 4% or 5% in some cases. 

But there may be an even sweeter deal out there: Dividend stocks that can also gain in value. 

"The energy sector -- you still have stocks that have good yields, and everyone's waiting for crude oil to turn a little," JJ Kinahan, chief market strategist at TD Ameritrade, told TheStreet. "If crude can get to $60 a barrel, you can have that opportunity."

The Brent Crude index is at roughly $60 a barrel, but has had trouble moving past that point in the past six months or so, as global economic growth hasn't looked promising. 

Kinahan's point was that some oil stocks have juicy dividend yields, and if oil prices do indeed move higher, those share prices would as well. The total return on picking up those stocks right now would be considerable in that scenario. 

BP  (BP) - Get Free Report  oil has a 6.7% dividend yield and is down 4% year-to-date. Chevron (CVX) - Get Free Report has a dividend yield of 4%, with the stock up only 5.4% on the year. Occidental Petroleum pays a dividend, which currently yields 6.9%. The shares are down 27% on the year. 

BP is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells BP? Learn more now.

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