Some very smart money has been recommending blue-chip integrated oil companies with good dividends and good balance sheets, as well as oil & gas MLPs, observes Jack Adamo, editor of Insiders Plus.

Although I suspect there's still downside in the sector — especially with a recession nearby — I'm willing to weather the storm. Chosen are companies that will survive, and they'll continue to grow when the recession is over.

As a result, their dividends — even if attenuated somewhat — will be of more value to us than just sitting on tons of cash. We will still hold a lot of cash to invest in the bargains that will eventually emerge, but meanwhile, I'm assuming you (like me) would like to have some money coming in.

I previously held on to Royal Dutch Shell, Class-B (RDS.B) for years, waiting for an expected turnaround that only came after I threw in the towel. Nevertheless, I'm going to start us off with a small position in our high income portfolio — despite recession risk— because I think the dividends will be worth it.

The stock is still on track and yields 6.7% at its current price. It has held its dividend steady for the last five years while it grew its operations nicely. In the last 10 years the stock has doubled and the dividend has nearly doubled too. It's trading at 11-times trailing earnings.

The stock is down 18% from its high this year, so there could be some tax selling in November and early December, so you might want to take a smaller position and/or use a stop loss order to limit a near-term slump.

Meanwhile, the most highly regarded of the energy big boys is Chevron Corp. (CVX). Its performance over the last 20 years certainly supports that view. The stock is up almost five-fold.

That's no Amazon, to be sure, but it is good returns for a predictable old-economy business that actually makes a profit. I'd take those returns any day, and just hope I lived to see them.

The stock is trading at 15-times trailing earnings, which is significantly below the market. It yields slightly above 4%. Buy Chevron Corp. up to $121.

The energy MLPs typically slide with the price of oil and gas, despite the fact that the correlation between their earnings and the commodities is tenuous and irregular. Rather than try to pick the cherries in the group, I've decided to go with the Alerian MLP ETF (AMLP). I like its largest constituents.

With this ETF, you don't get some of the tax benefits of the MLP, but you also don't get the exceptional tax headaches that go with them. The shares yield 8.5% at the moment, but with an ETF you should expect the quarterly dividend to vary.

The variation shouldn't be too much, except as regards whatever influence the recession causes. I think the worst case scenario would still have us above a 5% yield until the economy gets stronger. Buy Alerian MLP ETF up to $9.50

Finally, I also have a "Speculative Buy" in this sector — Western Gas Partners, L.P. (WES), which is down 27% since April due to a combination of factors. It was involved in a multi-party transaction that analysts feel is too difficult to assess at this time. It also missed Q2 earnings estimates. Analysts have lowered their price target for the year ahead to $28. It is $24 now.

Western may see some further pain, especially if it doesn't pick up some dollars before tax-selling season arrives. That said, the stock is still up more than 9% year-to-date, so it doesn't look like it's going out of business.

When sentiment is this bad about a stock, it may make a good long-term investment. The units yield 10.15% at the current price and the payout has grown very nicely over the last ten years, except for a three quarter-long pullback in 2012, after which the payout returned to growth.

Western Gas Partners is now is almost double its pre-slide level. The units trade for 15-times expected earnings. Western Gas Partners, L.P. is a Speculative Buy for risk-tolerant investors.

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