None of this is particularly positive for the likes of Shell and BP. But the time to think about buying shares in cyclical businesses is when things look tough.

Oil outlook

Oil prices have been falling recently and the outlook for 2026 isn’t strong. Producers are going to have to deal with challenges on both the demand side and the supply side. 

Source: Trading Economics

On the demand side, global growth is slowing. On top of this, high inventory levels and the transition to renewables – especially in China – create ongoing challenges.

In terms of supply, there are also big challenges. Oil production is high at the moment and this is being driven by higher output from the US, Guyana, Brazil, and Canada.

All of this makes a significant challenge for 2026. But investing is about looking past the next 12 months and I think there are clear reasons for optimism going forward. 

Time to strike?

The outlook for 2026 isn’t positive. But it’s times like these when shares in oil companies typically trade at their lowest levels and things can change quickly. 

Increasing geopolitical tensions, weakness in the US dollar, and lower interest rates can cause prices to rise rapidly. And there are also structural reasons for optimism.

Low oil prices tend to attract low investment levels from producers. There’s not much incentive to drill new wells or extend existing ones if the returns are likely to be weak.

When this happens, supply tends to fall away naturally as existing wells become less productive. And that tends to cause prices to recover over time.

A stock to consider

My top oil stock is Chord Energy (NASDAQ:CHRD) – a US company with operations in the Williston Basin. What sets it apart, in my view, is its capital allocation policy.

The firm doesn’t really engage in speculative drilling projects. Instead, it looks to expand via strategic acquisitions and use its cash for dividends and share buybacks.

Chord doesn’t publish an official break-even costs per barrel, but analysts estimate this to be somewhere between $40 and $45. That’s well below the current $56 price level.

That means the base dividend should be relatively resilient even if oil prices stay low in 2026. And with the stock having fallen recently, that’s a 5.8% yield at today’s prices.

Cyclical investing

Chord’s operations being focused in one area creates a certain risk. It means regulatory changes in North Dakota could have an outside effect on the overall company.

My own view, though, is that this is preferable to the windfall taxes the likes of BP and Shell are currently facing. And I also think prices are set to hit cyclical lows in 2026.

That’s why Chord is on my buy list heading into 2026. The time to be greedy is when others are fearful and it looks to me as though this is clearly the case right now.

The post Is 2026 the year to consider buying oil stocks? appeared first on The Motley Fool UK.

The top performer in my portfolio has been Rentokil (LSE:RTO) which climbed 14%, but the weakest was Chord Energy (NASDAQ:CHRD) which fell 11%. So what should I do about this?

Rentokil

The main catalyst for the big move in Rentokil shares was its Q3 trading update near the end of the month. Group revenues for Q3 were up 4.6% and organic sales increased 3.4%.

On the face of it, that’s not massively exciting. But both numbers are a big improvement on the 3.1% and 1.4% the firm reported at the end of Q2.

Rentokil made a huge acquisition in 2022 and the subsequent integration process seems to be taking forever. And I continue to see this as the biggest ongoing risk for the company.

On balance, though, I think there’s more growth to come from the business. And I still feel the stock looks cheap, though it’s not top of my list in November.

Chord Energy

There’s a very simple reason shares in Chord Energy fell in October. Oil prices fell below $60/bbl and that’s not a good sign for a company that produces and sells the stuff. 

The risk is that this continues. But I think the current downturn in oil prices might be a chance to add to my investment while the short-term outlook is less favourable. 

Chord has a clear decade’s worth of production ahead of it. And if – as I’m expecting – oil prices move higher over the long term, investors could stand to do very well. 

The firm has a big focus on returning cash to investors via dividends and share buybacks. This can exaggerate the natural cyclicality of oil stocks, but I see the downturn as an opportunity.

Next moves

Chord is one stock I’ve got an eye on in November, but it isn’t the only one. I’m looking at shares in the UK and the US that are high-quality companies at unusually cheap prices. 

In the UK, Judges Scentific is one name on my radar. The company is working through a difficult trading environment right now, but I like its long-term growth prospects. 

I’m also considering US tractor manufacturer CNH Industrial as an addition. I don’t know when crop prices that have caused sales to falter are going to recover, but I think the stock looks cheap at $10.50.

Those are two of the names I’m considering at the moment. But like any good investor, I’ll also be keeping an eye open for other opportunities that might present themselves. 

Long-term investing

It’s always good to pay attention to what’s going on in my Stocks and Shares ISA. But what happens in any given month ultimately doesn’t matter much for a long-term investor like me.

With Rentokil, it’s important that its integration keeps moving in the right direction. Progress might not be linear, but as long as it gets there sooner or later, I expect to do well.

Short-term oil fluctuations might make Chord’s share price go up one month and down the next. Over time, though, what matters most is the firm’s ability to keep producing.

The post Meet the best (and worst) performers from my Stocks and Shares ISA in October appeared first on The Motley Fool UK.

In both the UK and the US, I’m looking a bit further afield than the main indexes. But I think there’s a lot to be said for the opportunities that are on offer right now. 

Primary Health Properties

I’m a big fan of real estate investment trusts (REITs) as passive income investments. And Primary Health Properties (LSE:PHP) stands out for a number of reasons. 

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

The firm leases a portfolio of GP surgeries and its largest tenant is the NHS. In recent times, that’s meant strong occupancy levels and reliable rent collection – and I think this is set to continue. 

PHP is in the process of acquiring Assura – its major competitor. And the firm has used its own stock in the deal, which was trading with a higher dividend yield at the time.

That creates risk – it means the company will have to find additional savings from the combined venture, which can’t be guaranteed. But management has a plan for doing this. 

Increased scale and reduced competition should put the business in a stronger position when it comes to both financing and increasing future rents. And I think the optimism here is justified.

On top of this, an 8% dividend yield provides some level of security for investors. I used to own the stock a while ago, but the market’s response to the Assura deal might be my chance to get back in.

Chord Energy

Chord Energy (NASDAQ:CHRD) is an oil company UK investors might not have on their radars. But I think a 5% dividend yield and a focus on share buybacks means it deserves to be.

While other firms prioritise exploration, Chord returns cash to shareholders. Its leverage ratio remains below 0.5 (it’s currently 0.3), but it plans to distribute 75% of its adjusted free cash flow.

This is attractive in terms of passive income, but it limits the firm’s opportunities for expansion. And that creates risk for investors in terms of what happens when its existing reserves run out.

The issue looks more urgent than investors might think. At the start of the year, Chord had 883m barrels of oil equivalent in proved reserves, after extracting just under 85m barrels in 2024.

This makes it seem as though the firm has less than 10 years of production left. But it’s worth noting that the company added almost 64m barrels to its reserves through drilling. 

In other words, it replaced around 75% of the oil it extracted. And this, combined with the firm’s capital allocation policy means it’s a stock I think dividend investors should pay attention to.

Dividend-focused

Both Primary Health Properties and Chord Energy are dividend stocks in the strongest sense. Their capital allocation policies focus heavily on returning cash to shareholders. 

I’m looking at both as potential investments for my Stocks and Shares ISA in October. And I think investors looking for long-term passive income should consider doing the same.

The post With yields up to 8%, here are the dividend shares I’m looking at in October appeared first on The Motley Fool UK.

That includes some of the less-well-covered corners of the UK stock market as well as over in the US. And there are a couple of examples that stand out to me.

A 10% dividend yield

Shares in Alternative Income REIT (LSE:AIRE) doesn’t get much attention from investors. But the stock comes with a 10% dividend yield and there’s a lot to like about the underlying business.

The company is a real etate investment trust (REIT) that leases a diverse range of properties. What they have in common, though, is long contracts with increases that are linked to inflation.  

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Right now, the big risk is the firm’s debt. A £41m loan is set to expire in October and it’s unlikely the business is going to be able to refinance it at the same low interest rate.

That puts the dividend in immediate danger. But with the share price down almost 10% since the start of the year, investors should keep the potential threat in perspective.

Even if Alternative Income’s interest expense doubles, that would result in a 20% hit to the current dividend. And that would mean a passive income return of 8% a year on an investment at today’s prices.

In other words, I think the refinancing risk is reflected in the share price. And with leases having an average of 15 years left, the stock is worth a look for investors after long-term passive income.

A 15% shareholder return

Over the last 12 months, Chord Energy (NASDAQ:CHRD) has returned 15% of its current market value to investors. Around 6% was through dividends and the rest was via share buybacks. 

The firm extracts oil from the Williston Basin. With estimated reserves lasting 10 years at $60 per barrel, it doesn’t have the lowest costs, but I still think it’s worth considering. 

What sets Chord apart from other oil firms is its focus on returning cash to shareholders. It’s not trying to expand into wind and solar and it’s not really interested in speculative drilling projects.

Chord’s policy is to distribute at least 75% of the cash it generates to investors as long as its leverage ratio remains below 0.5. Right now, it’s at 0.3. 

If oil prices head lower in the near future – which is possible – returns could drop. Investors could go from getting 75% of $141m to 50% of a lower number and this could be a big decline.

For anyone with a bullish view of oil prices over the long term, though, I think Chord is well worth considering. That’s why it’s the only oil stock I own in my portfolio and remains on my buy list.

Income opportunities

In both the UK and the US, interest rates look set to fall despite inflation being on the rise. Chances to earn meaningful passive income might be limited in that situation. 

In my view, Alternative Investment REIT and Chord Energy are names that deserve more attention than they get. Whether it’s now or in the future, I think they’re worth considering.

The post 2 dividend stocks that deserve more attention than they get appeared first on The Motley Fool UK.

In my view, it’s a good idea to try and keep an eye on a range of companies from different industries and geographies. And there are a couple on my watchlist that look attractive at the moment.

Chord Energy

Shares in Chord Energy (NASDAQ:CHRD) currently come with a dividend yield above 6%. That’s quite attractive, but this is only part of the story. 

In the first quarter of 2025, the company returned around three times as much cash to shareholders via share buybacks as it did through dividends. All things considered, that’s a big return. 

Moreover, Chord is committed to returning at least 75% of its free cash to investors while its leverage ratio remains below 0.5. It’s currently at 0.3 and the good news doesn’t stop there. 

Oil prices have risen from $60 per barrel to $72 over the last few days, but the response from the stock has been relatively placid. I think this should put it on investor radars.

The company doesn’t have the lowest production costs in the world and this can be a risk if oil prices fall again. Higher breakeven costs typically mean more pressure on profits when things are tough. 

Chord might be a stock that isn’t familiar to too many investors. But I own it in my ISA and its approach to capital allocation certainly makes me think of it as one to keep a close eye on.

Diageo

By contrast, most investors probably have heard of Diageo (LSE:DGE). But with a 4% dividend yield, it’s worth wondering whether there’s any need to reinvent the passive income wheel. 

There’s no question the FTSE 100 drinks manufacturer has been going through a bumpy time recently. Sales growth in the last quarter was reasonable, but a lot of this was pulled forward.

Tariff uncertainty has been leading US wholesalers to carry extra inventory in case importing spirits becomes difficult. And I expect this to weigh on sales growth as it normalises in the near future. 

Despite the potential issues on the demand side, the firm’s long-term strengths remain intact. Its brands continue to lead in their respective categories and its scale is still a big advantage.

Given this, I think passive income investors should keep a close eye on the business. Over the last few years, opportunities to buy Diageo shares with a 4% dividend yield have been scarce.

Consumers might be drinking less in general, but spirits have been taking market share from beer and wine. And that might be a very positive long-term sign for the FTSE 100 company.

Opportunities

One of the best things about the stock market is that it doesn’t take a huge amount of cash to get started on a passive income journey. The big question for investors is where to begin.

I think both Chord and Diageo are stocks that investors should have on their radars. The shares might be out of favour with the market, but both businesses are focused on returning cash to shareholders.

The post 2 stocks every passive income seeker should know about appeared first on The Motley Fool UK.

abrdn

What it does: abrdn is an investment company whose clients range from Sovereign wealth funds through to individuals.

By Andrew Mackie. The latest trading update from abrdn (LSE: ABDN) back in October, highlighted that it continues to struggle to stem outflows from its funds. Year to date, capital withdrawn from its funds has been £2.3bn greater than deposits. Since 2022, net outflows have totalled over £25bn.

The reasons for these outflows are varied. But one key factor has been the rise of passive investing strategies. As an active investment manager, its funds have simply been unable to match the stellar returns of the S&P 500, which is where the vast majority of global capital is drawn to.

So, is this a doomed business? I don’t believe it is. Passive investing strategies work well when markets are rising, but when they are falling, they can be disastrous. In such a market, active managers tend to stand out. Indeed, this has been the case in bond markets, where abrdn’s funds have outperformed.

Its falling share price means it now sits on a meaty 10.5% dividend yield. The road ahead will undoubtedly be bumpy but I could not sit on the sidelines when shares in a quality business go on sale.

Andrew Mackie owns shares in abrdn.

Chord Energy

What it Does: Chord Energy is an oil and gas company. It’s the largest independent operator in the Williston Basin.

By Stephen Wright. Warren Buffett et al have been continuing to build Berkshire Hathaway’s stake in Occidental Petroleum. In a similar spirit, I’ve been buying shares in Chord Energy (NASDAQ:CHRD).

Chord’s operations are in the Williston Basin. The downside to that is that extraction costs are higher than they are in the Permean – where Occidental has its operations. 

On top of this, depletion rates are relatively high, meaning new wells either have to be found or acquired more regularly. Despite this, I think the stock looks like a good opportunity.

The company is set to return 75% of its free cash flows to investors. And if oil prices average $70 per barrel, that’s forecast to be around $525m in dividends.

With a market cap of $7.8bn, that’s a 6.7% yield. And I’m expecting this to increase over the next decade, making for an attractive passive income opportunity.

Stephen Wright owns shares in Berkshire Hathaway and Chord Energy.

CrowdStrike

What it does: CrowdStrike is a fast-growing cybersecurity company that has clients globally. 

By Edward Sheldon, CFA. I’ve had CrowdStrike (NASDAQ: CRWD) shares on my watchlist for ages now. And I finally pulled the trigger and bought a few for my portfolio. 

The main reason I’ve invested here is that the cybersecurity industry is set for huge growth over the next decade. And this is the fastest-growing large-cap company in the market.

I also think the industry offers an element of defence. Given the disastrous damage that cyberattacks can cause, no company can afford to pull back on cybersecurity spending today.

It’s worth noting that CrowdStrike was responsible for the major global IT outage a few months ago. This could result in slightly slower growth (and share price volatility) in the near term as customers renegotiate their contracts. So, I’ve started with a very small position here to reduce my risk. 

Taking a five to 10-year view, however, I’m fairly confident that this company will generate good returns for me. 

Edward Sheldon owns shares in CrowdStrike 

iShares S&P 500 Information Technology Sector ETF

What it does: iShares S&P 500 Information Technology Sector ETF invests in industry giants like the ‘Magnificent Seven.’

By Royston Wild. As its name implies, the iShares S&P 500 Information Technology Sector ETF (LSE:IUIT) provides exposure to the US’ biggest technology stocks.

Consequently, it has substantial growth potential and the capacity to deliver exceptional capital gains. In the past five years, it’s delivered an impressive average yearly return of 26.2%.

The ETF’s three biggest holdings are Apple, Nvidia and Microsoft, which collectively account for almost 60% of its entire weighting. So poor news coming out of these businesses can have a significant adverse effect on the fund.

Still, I’m confident a tech-focused fund like this could deliver more great returns over the long term. Segments like robotics, AI, cybersecurity, cloud services, and spatial and quantum computing are all tipped for strong growth in the coming decade.

And with capital spread across 69 different companies, this ETF means investors take on less risk than by investing in one or two particular shares. This is critical, in my opinion, given the industry’s rapid pace of change.

Royston Wild owns iShares S&P 500 Information Technology Sector ETF.

ITV

What it does: ITV is a broadcaster with a terrestrial and digital business, as well as operating production studios and facilities

By Christopher Ruane. The market did not like a recent trading update from ITV (LSE: ITV). That reaction was understandable. Revenues in the first nine months of the year were 8% below the same period last year. Total revenue in the studios part of the business fell a fifth compared to the prior year period.

There are risks that advertising demand may remain weak. Plans for further cost-cutting also involve risks, as I see it. Such cuts can hurt staff morale and also reduce the organisation’s nimbleness, at a time when advertising demand is hard to predict.

Still, I think the current share price undervalues this consistently profitable business. The share price is within 1% of where it began the year, but has more than halved in five years.

That means the dividend yield is now a juicy 7.9%.

ITV still has a lucrative legacy business and has been building its digital footprint strongly. The studios arm provides additional revenue streams.

Christopher Ruane owns shares in ITV.

MercadoLibre

What it does: MercadoLibre is a Latin American based e-commerce enterprise that simultaneously providing digital payment solutions.

By Zaven Boyrazian. While Amazon dominates e-commerce across Europe and North America, MercadoLibre (NASDAQ:MELI) reigns supreme in Latin America. The online marketplace took a bit of a tumble following its latest earnings. Despite revenue surging by 35% to a new high of $5.3bn for the quarter, the lacklustre 9.4% growth in profits due to shrinking margins caused concern.

A drop from 18% operating margins to 10% is undoubtedly worrying. The drag on earnings stems from a jump in credit card loans that helped deliver higher revenue but at a lower margin. When paired with aggressive investment in new distribution facilities in Brazil, seeing earnings take a hit isn’t entirely surprising.

Increased exposure to credit card debt comes at a higher level of risk. But, management seems to be acting prudently to avoid bad debt. At the same time, MercadoLibre just added another seven million new buyers to its online marketplace, bringing the total to 60.8 million!

Zaven Boyrazian owns shares in MercadoLibre.

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