Dividends4Life: 3 Reasons These Energy Dividend Stocks Could Plunge Further

Dividend Growth Stocks News

Oil-related stocks such as frack sand producers US Silica Holdings (NYSE: SLCA ) , Hi-Crush Partners (NYSE: HCLP) , and Emerge Energy Services (NYSE: EMES ) , have had a miserable six months, their stock prices punished by the near-50% collapse of oil prices. Yet three major threats could cause their share prices to plunge even further. The risk of oil prices continuing to fall, threats to existing contracts, and the risk of distribution cuts are all factors that investors need to be aware of. Let's take a look at these three factors and how they could impact the future of these companies.

Oil prices have not necessarily hit bottom - Oil prices are highly complex and unpredictable, determined by geopolitical events and any number of other variables. Long-term contracts might not be as protective as you think - I have previously pointed to the fact that 70%, 88%, and 87% of US Silica's, Hi-Crush Partners' and Emerge Energy's respective current and medium-term production is protected under contracts that extend out as long as four years. Distribution cuts could send prices crashing - Unlike US Silica, which is a corporation, Hi-Crush Partners and Emerge Energy Services are master limited partnerships, or MLPs.

Source: Motley Fool

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