Vanguard Energy ETF is up 45% YTD: what’s next?

on May 23, 2022
  • The Vanguard Energy Index Fund ETF (VDE) is up 45% YTD at present.
  • Bryn Talkington explains why energy stocks could go further up from here.
  • Oil prices remain well above $100 amidst the ongoing war in Ukraine.

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Continue holding energy stocks because they’ll likely go further up from here, says Requisite Capital’s Bryn Talkington. The Vanguard Energy Index Fund ETF is already up 45% year-to-date.  

Energy will contribute 18% to S&P bottom-line this year

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Talkington agrees that “Energy” is trading at levels not seen in the last two decades, but views the ongoing war in Ukraine as a strong enough tailwind for the sector to remain resilient. On CNBC’s “Halftime Report”, she added:

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Energy, a year and a half ago, was about 2.80% of the S&P. Right now, it’s about 4.80%. This year, energy will contribute $18 to the S&P’s bottom-line, close to 18%. So, I think the earnings are real there and the returns, therefore, are justified.

According to Pioneer Natural Resources, oil will likely remain above $100 a barrel in the next couple of years as Russian energy goes off the market.

Other reasons why Talkington is bullish on energy stocks

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Talkington still dubs “Energy” as attractively inexpensive relative to the S&P, which adds to her reasons for being positive on the space. Speaking with CNBC’s Scott Wapner, she said:

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I see people getting sceptical but remember that you do get great dividends in energy stocks, even if you didn’t get much capital appreciation. Devon is still paying 8.0% dividend. I’ll take that all day long even if Devon does nothing.

Earlier in May, Devon Energy reported mixed results for its fiscal first quarter. The stock is up more than 50% versus the start of the year 2022.  

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