With the price of oil hovering above $82 a barrel, investors have taken notice that the energy sector seems like a safe-bet play in the current bull market, and I can't blame them. Oil inventory numbers have remained stable, and with summer almost here, many expect oil prices to rise with increased demand from travelers. That being said, another good reason to take a long look at some energy stocks is their dividends. Quite a few oil and gas companies reward their shareholders with tidy dividends to compliment the upside potential of their shares' capital gains. Sometimes, however, a good dividend isn't enough. Smart dividend investors know that a dividend is only good if it's reliable. With that in mind, following are four oil and gas stocks that offer investors a solid dividend yield along with dividend coverage ratios that assure shareholders they can count on the cash distribution being there in the future.

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Company

Dividend Yield

Coverage Ratio

Total SA (NYSE:TOT)

5.7%

18

TransAlta Corp. (Nasdaq:TAC)

5.5%

24

Statoil ASA (NYSE:STO)

4.2%

7.8

ConocoPhillips (NYSE:COP)

4.2%

4.6



Total SA
Of the four companies highlighted above, I like what I see from Total SA. The French integrated firm's fundamentals point to a stock that is being undervalued relative to its competitors. Offering up a dividend yield of 5.7% and a coverage ratio of 18, Total should have no problems maintaining its dividend. In fact, with more than $16 billion in cash on its balance sheet, Total could be in a position to up its dividend in the coming quarters.

Acquisitions Would Increase Total's Asset Base
Shareholders, however, should be hoping that management deploys that free cash toward acquisitions to add to its asset base, because Total's return on assets was a respectable 5.52. Keep in mind that for a firm of Total's size (market cap of $128 billion), an ROA above 5 in the integrated oil and gas industry is commendable. Not to mention that Total trades at a low P/E ratio of only 10.8, far below that of competitors such as Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX) and Royal Dutch Shell (NYSE: RDS.A). As well, it can be picked up for only 85% of sales. If you're not averse to investing in ADRs, I think Total has the potential to outperform the sector if oil prices remain strong.

Strong Balance Sheets And Solid Growth Outlooks
While I am bullish on the energy sector as a whole going into the next quarter, for dividend investors looking to have their cake and eat it too, the four companies listed previously are great options. With strong balance sheets and solid growth outlooks, dividend investors can expect that one or more of these firms could increase their dividend in the coming quarters. As I previously mentioned, Total SA looks like a strong pick, and interested investors should do their own research on the stock to see if it aligns with their investment strategy. (To learn more, check out our Oil And Gas Industry Primer.)

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Tickers in this Article: TOT, TAC, STO, COP, XOM, CVX, RDS.A

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