TotalEnergies

US equities are exceptionally buoyant. Index multiples sit well above long-run averages, and leadership is concentrated in a handful of growth names. In football, offense sells tickets, but defense wins Super Bowls.

I believe it is time to add a defensive holding that is backed by hard assets and not multiple expansion, that pays shareholders to wait, and that tends to benefit from the very shocks that hurt everything else: inflation, geopolitical instability and energy supply disruption.

TotalEnergies fits that brief. It is a globally diversified, cash-rich energy major that trades at a 30–45% discount to ExxonMobil and Chevron, with a growing 4.69% dividend yield, a buyback of about 3% a year, low gearing of 13.1%, and a platform that spans oil, LNG, refining, renewables and power.

How TotalEnergies makes money

The company earned $18.5bn of adjusted operating profit in 2025 across five businesses.

Upstream. Finding and producing crude oil and natural gas. It is the most profitable business, at a production cost of $5 a barrel. In 2025 the company produced 2.53 million barrels of oil equivalent a day, up 3.9%, with 12 years of reserves.

Liquefied natural gas. Producing, buying and shipping LNG to utilities and industrial customers around the world: 44 million tonnes sold in 2025.

Refining and chemicals. Turning crude into gasoline and jet fuel, for $2.4bn of operating income.

Integrated power. Generating and buying electricity: $2.2bn of operating profit on 48 TWh produced.

Marketing and services. Gas stations and fuel sales to consumers, for $1.4bn.

Paid to wait

TotalEnergies is the more resilient play in a volatile market, because investors receive cash even if the valuation never changes. The 4.69% dividend and management's guidance of $3–6bn of buybacks a year create an indicated capital-return yield of 6.3–7.8%. If earnings stay flat and the share count falls, earnings per share could still rise 1.6–3.2% a year.

The market treats the stock as a cyclical bet. The real thesis is strong cash return per share. And if we are at a cyclical peak, as some analysts argue, 13.1% gearing gives the company room to manage its debt while protecting the dividend. Buybacks, however, could be reduced if commodity prices or cash flow weaken.

The X factor

First came electricity, then automobiles; now AI. Each technological wave has increased the need for energy, and this one lands on electricity and gas, the two things a data center consumes. TotalEnergies already sells both: 48 TWh of power generated in 2025 and the largest export position in US LNG, at 19 million tonnes. A diversified platform captures that demand wherever it shows up, without betting on one fuel.

The second effect is internal. AI does not eliminate the need for the oil, gas, power and infrastructure that TotalEnergies supplies. It can interpret seismic data, model reservoirs, improve predictive maintenance and strengthen power forecasting, which lowers costs and expands margins.

What the Street thinks

Fifteen analysts cover the stock: 12 rate it a buy, 3 a hold and none a sell. Their average target is $96.11, with a range of $84 to $105. That is 6.4% above the price, and with the dividend it indicates a 12-month return of about 11.1%.

A consensus target aggregates other people's models; it is not a valuation. An upside of 6.4% is below what the sell side usually shows, and having no sell ratings is standard for a company this large, so the level is weak evidence. The $21 spread is the informative number. The Street largely agrees, and it is not counting on a re-rating either.

What could go wrong

The oil price reverses. Second-quarter earnings were huge because of $104 Brent and refining margins that management says "may not last." If the Strait of Hormuz reopens and OPEC+ supply grows, Brent could fall back to $60, cutting earnings per share by roughly 20%, slowing the buyback and hurting the stock.

Geopolitics. About 210,000 barrels a day of Middle East output was offline in the second quarter, and shut-ins in Qatar cut LNG volumes. Windfall taxes and sanctions that lead to seized assets are also possible. Dividends paid in euros expose US holders to currency moves and more tax.

Integration is not a hedge. In 2023 Brent fell 18%. Upstream profit fell 37.4%, but LNG fell 44.5% and refining 36.3%. LNG contracts are largely indexed to oil, which makes them a second bet on the same variable.

Super Bowls are won by defense

TotalEnergies is a conservative stock that produces income and serves as a hedge against inflation. It is not a commodity bet. When the rest of the market is priced for offense, I want one holding that pays me to wait.