10 Best Natural Gas Dividend Stocks To Buy

In this article, we discuss 10 best natural gas dividend stocks to buy.

As per the The Business Research Company, the natural gas market size is expected to increase from $0.84 trillion in 2021 to $0.94 trillion in 2022 at a compound annual growth rate (CAGR) of 12%. The global natural gas market is forecasted to grow to $1.23 trillion in 2026 at a compound annual growth rate of 6.9%. 

On October 27, The US Energy Information Administration announced a largely bullish 52 Bcf increase to natural gas inventories during the last week, driven by high winter heating demand across the Central and Eastern US tightening the local supply and demand equilibrium. However, this was lower than the consensus expectation for a 65 Bcf addition to gas inventories by S&P Global. 

A new global gas world order is underway, as the 50-year gas trade between Europe and Russia unravels in the wake of the Russian war on Ukraine. Suppliers are rearranging their trade patterns, and producers are looking into new prospects and opportunities for creating alternative supply sources. This gives way to multiple players entering the market or expanding their share as end-markets move away from Russian gas. Some of the best natural gas stocks to invest in, which also pay generous dividends, include Exxon Mobil Corporation (NYSE:XOM), Halliburton Company (NYSE:HAL), and Chesapeake Energy Corporation (NASDAQ:CHK). 

Our Methodology 

We chose the following natural gas dividend stocks based on positive analyst coverage, strong business fundamentals, and resilient dividend profiles. The dividend yields as of October 28 have been mentioned. We have assessed the hedge fund sentiment from Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022. 

Photo by Max Bender on Unsplash

Best Natural Gas Dividend Stocks To Buy

10. Equinor ASA (NYSE:EQNR)

Number of Hedge Fund Holders: 9

Dividend Yield as of October 28: 3.56%

Equinor ASA (NYSE:EQNR) was incorporated in 1972 and is headquartered in Stavanger, Norway. The company engages in the exploration, production, and transportation of petroleum and petroleum-derived products. Equinor ASA (NYSE:EQNR) also transports, processes, markets, and trades in oil and gas commodities, such as crude and condensate products, gas liquids, natural gas, and liquefied natural gas. 

On October 28, Equinor ASA (NYSE:EQNR) declared a quarterly dividend of $0.20 per share, in line with previous. The dividend is payable on January 25, 2023, to shareholders of record on January 10. Additionally, the board also declared an extraordinary cash dividend of $0.70. Equinor ASA (NYSE:EQNR)’s dividend yield on October 28 came in at 3.56%, making it one of the best dividend stocks to invest in. 

SEB Equities analyst Anders Rosenlund upgraded Equinor ASA (NYSE:EQNR) to Buy from Hold with a NOK 450 price target on September 7. 

According to Insider Monkey’s second quarter database, 9 hedge funds were bullish on Equinor ASA (NYSE:EQNR), compared to 16 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest position holder in the company, with 10.25 million shares worth $356.45 million. 

In addition to Exxon Mobil Corporation (NYSE:XOM), Halliburton Company (NYSE:HAL), and Chesapeake Energy Corporation (NASDAQ:CHK), Equinor ASA (NYSE:EQNR) is one of the best dividend stocks to invest in. 

Here is what Massif Capital has to say about Equinor ASA (NYSE:EQNR) in its Q2 2021 investor letter:

“We currently have two oil-related positions in our portfolio and believe the oil opportunity set is ripe. As one might expect, both positions, (including Equinor: EQNR) performed well during the second quarter, given the steady march higher that oil has made in recent months. We maintain a positive outlook for both companies, although, importantly, our posture is not predicated on an expectation for continued oil price appreciation. This is not because of our inability to imagine scenarios where that does occur, but more out of an abundance of caution for what is a highly volatile commodity that at current price levels should be more than sufficient to generate ample free cash flow for any investable oil firm.

In the future, we expect both firms in the portfolio to generate significant free cash flow and expect EQNR to reinvest that free cash flow into a combination of offshore oil and wind opportunities with high rates of return. The path forward for AOI is more complicated and does warrant a few comments.”

9. New Fortress Energy Inc. (NASDAQ:NFE)

Number of Hedge Fund Holders: 21

Dividend Yield as of October 28: 0.73%

New Fortress Energy Inc. (NASDAQ:NFE) is a New York-based integrated gas-to-power infrastructure company that supplies energy and development services to end-users worldwide. The company offers natural gas procurement and liquefaction, storage and regasification units, and liquefied natural gas carriers. 

Jefferies analyst Sam Burwell on October 19 initiated coverage of New Fortress Energy Inc. (NASDAQ:NFE) with a Buy rating and a $65 price target. He believes the “Option Value” of energy is up again, supported by a constrained capital cycle. While this is most pronounced in oil & gas, it is also seen in energy transition names, said the analyst, who thinks energy’s “Option Value can stay higher for longer” without a significant increase in investment across the sector. 

According to Insider Monkey’s data, 21 hedge funds were bullish on New Fortress Energy Inc. (NASDAQ:NFE) at the end of the second quarter of 2022, compared to 19 funds in the prior quarter. Michael Novogratz’s Fortress Investment Group is the largest position holder in the company, with 13.4 million shares worth $530.2 million. 

8. NiSource Inc. (NYSE:NI)

Number of Hedge Fund Holders: 23

Dividend Yield as of October 28: 3.63%

NiSource Inc. (NYSE:NI) is headquartered in Merrillville, Indiana, and it operates as a regulated natural gas and electric utility company in the United States. On August 9, NiSource Inc. (NYSE:NI) declared a $0.235 per share quarterly dividend, in line with previous. The dividend is payable on November 18, to shareholders of the company as of October 31. NiSource Inc. (NYSE:NI)’s dividend yield on October 28 came in at 3.63%. It is one of the best dividend stocks to invest in.

On October 24, Guggenheim analyst Shahriar Pourreza reiterated a Buy rating on NiSource Inc. (NYSE:NI) but lowered the firm’s price target on the stock to $27 from $32.

According to Insider Monkey’s data, 23 hedge funds were long NiSource Inc. (NYSE:NI) at the end of the second quarter of 2022, with combined stakes worth $389 million, compared to 28 funds in the prior quarter worth $607 million. Israel Englander’s Millennium Management is the largest position holder in the company, with 5.2 million shares valued at nearly $154 million. 

7. BP p.l.c. (NYSE:BP)

Number of Hedge Fund Holders: 27

Dividend Yield as of October 28: 4.35%

BP p.l.c. (NYSE:BP) is a London-based energy firm which operates through Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments. It is one of the best dividend stocks to consider. On October 17, BP p.l.c. (NYSE:BP) agreed to acquire Archaea Energy Inc. (NYSE:LFG) for nearly $26 per share in cash, or a total enterprise value of $4.1 billion, including $800 million of net debt.

HSBC analyst Kim Fustier on October 24 upgraded BP p.l.c. (NYSE:BP) to Buy from Hold with a 530 GBp price target. European oil firms have “visibly lagged” U.S. peers in the recent rally, creating an “unjustified” valuation gap, the analyst told investors. The analyst thinks macro drivers should continue to lead the sector higher and oil stocks should act defensively if the economic environment deteriorates further. She cited valuation for the upgrade of BP p.l.c. (NYSE:BP) and believes that oil names can continue to perform on higher crude prices into the end of this year. 

According to Insider Monkey’s data, 27 hedge funds were bullish on BP p.l.c. (NYSE:BP) at the end of June 2022, with combined stakes worth about $1.8 billion. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest stakeholder of the company, with 26.5 million shares amounting to $750.4 million. 

6. EOG Resources, Inc. (NYSE:EOG)

Number of Hedge Fund Holders: 43

Dividend Yield as of October 28: 2.24%

EOG Resources, Inc. (NYSE:EOG) is a Texas-based company that explores for, develops, produces, and markets crude oil, natural gas, and natural gas liquids. On September 29, EOG Resources, Inc. (NYSE:EOG) declared a $0.75 per share quarterly dividend, which is payable on October 31, to shareholders of record on October 17. EOG Resources, Inc. (NYSE:EOG)’s dividend yield on October 28 stood at 2.24%. 

Citi analyst Scott Gruber on October 25 raised the price target on EOG Resources, Inc. (NYSE:EOG) to $150 from $139 and reaffirmed a Buy rating on the shares ahead of the Q3 results. The analyst refreshed his model to capture EOG Resources, Inc. (NYSE:EOG)’s latest Q3 hedge loss and cash settlement payments for other hedges, as the company moves towards hedging less of its production going forward.

Among the hedge funds tracked by Insider Monkey, EOG Resources, Inc. (NYSE:EOG) was part of 43 public stock portfolios at the end of the second quarter of 2022, compared to 49 funds in the earlier quarter. Harris Associates held the leading position in the company, comprising 7.6 million shares worth $838.3 million. 

Like Exxon Mobil Corporation (NYSE:XOM), Halliburton Company (NYSE:HAL), and Chesapeake Energy Corporation (NASDAQ:CHK), EOG Resources, Inc. (NYSE:EOG) is one of the top natural gas dividend stocks to consider. 

Here is what Oakmark Select Fund has to say about EOG Resources, Inc. (NYSE:EOG) in its Q1 2022 investor letter:

“EOG Resources (NYSE:EOG) (+36%), was among our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”

5. Halliburton Company (NYSE:HAL)

Number of Hedge Fund Holders: 43

Dividend Yield as of October 28: 1.34%

Halliburton Company (NYSE:HAL) is a Texas-based provider of oil and gas equipment and services to the energy industry worldwide. On October 25, Halliburton Company (NYSE:HAL) posted its Q3 results, announcing non-GAAP earnings per share of $0.60 and a revenue of $5.36 billion, outperforming market estimates by $0.04 and $20 million, respectively. Revenue over the period climbed 38.9% year-over-year in the third quarter of 2022. It is also one of the best dividend stocks to buy. 

Susquehanna analyst Charles Minervino on October 26 raised the price target on Halliburton Company (NYSE:HAL) to $51 from $48 and kept a Positive rating on the shares. The analyst said they posted robust Q3 results with revenues, operating income, EPS, and free cash flow all exceeding his expectations. This is a sign that Halliburton Company (NYSE:HAL) is executing very well as the oilfield services upcycle creates momentum, as per the analyst. 

According to Insider Monkey’s data, 43 hedge funds were long Halliburton Company (NYSE:HAL) at the end of Q2 2022, compared to 47 funds in the preceding quarter. Richard S. Pzena’s Pzena Investment Management is the biggest stakeholder of the company, with 16.7 million shares worth $523 million. 

4. Pioneer Natural Resources Company (NYSE:PXD)

Number of Hedge Fund Holders: 56

Dividend Yield as of October 28: 9.89%

Pioneer Natural Resources Company (NYSE:PXD) is headquartered in Irving, Texas, operating as an independent oil and gas exploration and production company in the United States. On October 27, Pioneer Natural Resources Company (NYSE:PXD) declared a $5.71 per share quarterly dividend. The dividend is distributable on December 15, to shareholders of the company as of November 30. Pioneer Natural Resources Company (NYSE:PXD)’s dividend yield on October 28 came in at 9.89%. 

On October 18, Piper Sandler analyst Mark Lear raised the price target on Pioneer Natural Resources Company (NYSE:PXD) to $346 from $311 and kept an Overweight rating on the shares. After a tumultuous September, exploration and production firms are “back on solid footing heading” into the Q3 results with the “OPEC+ supply cuts mostly to thank,” the analyst told investors in a research note.

Among the hedge funds tracked by Insider Monkey, 56 funds reported owning stakes in Pioneer Natural Resources Company (NYSE:PXD) at the end of Q2 2022, compared to 54 funds in the prior quarter. Gavin M. Abrams’ Abrams Bison Investments is one of the leading position holders in the company, with 598,000 shares worth $133.40 million. 

Here is what Carillon Scout Mid Cap Fund has to say about Pioneer Natural Resources Company (NYSE:PXD) in its Q1 2022 investor letter:

“Pioneer Natural Resources (NYSE:PXD) performed well in a strong energy sector. Pioneer stood out recently with a pledge to return a large majority of free cash flow to shareowners through dividends and stock buybacks, and ended hedging to give shareowners more earnings and dividend potential should oil and gas prices continue to rise.”

3. Schlumberger Limited (NYSE:SLB)

Number of Hedge Fund Holders: 64

Dividend Yield as of October 28: 1.39%

Schlumberger Limited (NYSE:SLB) is a Texas-based company that provides software, information management, and IT infrastructure services to the oil and gas sector. On October 21, Schlumberger Limited (NYSE:SLB) declared a quarterly dividend of $0.175 per share, in line with previous. The dividend is payable on January 12, 2023, to shareholders of record on December 7. Schlumberger Limited (NYSE:SLB) posted Q3 adjusted earnings and revenues that exceeded expectations, as soaring oil and gas prices resulted in more drilling activity.

On October 26, Barclays analyst J. David Anderson raised the price target on Schlumberger Limited (NYSE:SLB) to $62 from $61 and maintained an Overweight rating on the shares following the “strong” Q3 results. 

According to Insider Monkey’s data, 64 hedge funds were bullish on Schlumberger Limited (NYSE:SLB) at the end of June 2022, compared to 58 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with more than 27 million shares worth $968.3 million. 

Here is what ClearBridge Investments specifically said about Schlumberger Limited (NYSE:SLB) in its Q2 2022 letter:

“We further added to our positioning for the accelerating energy transition with the purchase of Schlumberger Limited (NYSE:SLB), a global provider of oilfield services. As a technology leader, Schlumberger should generate strong free cash flow over the next few years as the industry recovers, using its excess cash to gain market share from smaller players and to expand into new areas of growth. Through its scale, presence, partnerships and technology, Schlumberger is targeting expansion into new large addressable markets such as carbon capture, hydrogen, geothermal and lithium extraction.”

2. Chesapeake Energy Corporation (NASDAQ:CHK)

Number of Hedge Fund Holders: 67

Dividend Yield as of October 28: 2.25%

Chesapeake Energy Corporation (NASDAQ:CHK) is one of the best natural gas dividend stocks to invest in. The Oklahoma-based company engages in the acquisition, exploration, and development of properties for the production of oil, natural gas, and natural gas liquids from underground reservoirs in the United States. 

Jefferies analyst Lloyd Byrne initiated coverage of Chesapeake Energy Corporation (NASDAQ:CHK) on October 19 with a Buy rating and a $150 price target. He believes the “Option Value” of energy is up again, driven by a restricted capital cycle. 

According to the second quarter database of Insider Monkey, 67 hedge funds were long Chesapeake Energy Corporation (NASDAQ:CHK), compared to 59 funds in the prior quarter. Howard Marks’ Oaktree Capital Management is the largest stakeholder of the company, with 10.5 million shares worth $851.6 million. 

Miller Value Partners made the following comment about Chesapeake Energy Corporation (NASDAQ:CHK) in its Q3 2022 investor letter:

“Chesapeake Energy Corporation (NASDAQ:CHK) gained 19.1% in the period. The company reported 2Q22 Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization, and Exploration Expense (EBITDAX) of $1,269MM, +195.8% Y/Y, ahead of consensus of $1,226MM, and Adjusted Earnings per Share (EPS) of $4.87, compared to 2Q21 EPS of $1.64, ahead of analyst expectations for EPS of $3.82. Chesapeake generated adjusted free cash flow (FCF) of $494MM, bringing TTM FCF to $1,663MM, or a FCF yield of 14.4%. Management also raised the company’s base dividend by 10% to $2.20/share, bringing the total quarterly dividend to $2.32/share, or an annualized yield of ~9.7%. Additionally, the company doubled its existing share repurchase authorization from $1B to $2B and has executed $670MM in repurchases so far through 7/31/22. Collectively, management is guiding for $1.2B in total FY22 dividends, at the midpoint, and $1B in share buybacks, implying total FY22 shareholder returns of $2.2B, or ~19.1% of the company’s market cap.”

1. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 72

Dividend Yield as of October 28: 3.18%

Exxon Mobil Corporation (NYSE:XOM) is one of the premier energy dividend stocks to invest in. On October 28, Exxon Mobil Corporation (NYSE:XOM) declared a $0.91 per share quarterly dividend, a 3.4% increase from its prior dividend of $0.88. The dividend will be paid to shareholders on December 9. U.S. energy giants Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) reported a combined $31 billion in third quarter profits.

On October 18, Jefferies analyst Lloyd Byrne upgraded Exxon Mobil Corporation (NYSE:XOM) to Buy from Hold with a price target of $133, up from $90. Exxon Mobil Corporation (NYSE:XOM) invested through the cycle, while the rest of the industry limited capital, said the analyst, who believes higher capital paired with increasing commodity prices will allow the company to de-lever and make room for growth in both the Upstream and Downstream segments.

Among the hedge funds tracked by Insider Monkey, 72 funds were bullish on Exxon Mobil Corporation (NYSE:XOM) at the end of the second quarter of 2022, compared to 83 funds in the preceding quarter. Rajiv Jain’s GQG Partners is the biggest stakeholder of the company, with 47.5 million shares worth over $4 billion. 

In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:

“Integrated oil and gas giant Exxon Mobil Corporation (NYSE:XOM) performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industry wide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”

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Disclosure: None. 10 Best Natural Gas Dividend Stocks To Buy is originally published on Insider Monkey.