11 Best Energy Dividend Stocks To Invest In

In this article, we discuss 11 best energy dividend stocks to invest in.

The energy sector in the US remained stable in 2022 due to high prices and tight supplies. The sector ended the year with record gains, soaring 58% as of December 30, compared with a roughly 20% decline in the S&P 500. According to Dow Jones Market Data, this was the first time ever for the energy sector to emerge as a solo winner of the S&P 500 calendar year. Moreover, it was the benchmark’s only sector that did not decline during the year.

One of the main factors that contributed to the solid performance of the energy sector last year was the rising oil and gas prices. Analysts are expecting the trend to continue this year as well. Craig Erlam, a senior market analyst for OANDA in New York, talked to Fox Business about the energy industry’s outlook for 2023. He asserted that many geo-political tensions could still keep the oil and gas prices elevated this year. He further mentioned that though fluctuating market conditions could not reveal a clear picture, the energy sector is still in a good shape amid a slow global economy.

The outperformance of the energy industry is driving investors toward the sector as energy companies have steadily raised their dividends over the last 12 months, as reported by Wall Street Journal. The report also mentioned that these payouts would still hold an effect even if the economy enters a recession. In addition to this, investors also tend to focus on companies that have strong free cash flow generation. According to a report by Fidelity, free cash flow yields in the energy industry were at their all-time high relative to the broader market at the end of 2022. Moreover, many energy companies have significantly reduced their debts over the past two years and are now returning cash to shareholders through dividends and share repurchases.

Exxon Mobil Corporation (NYSE:XOM), NextEra Energy, Inc. (NYSE:NEE), and Devon Energy Corporation (NYSE:DVN) are some popular energy companies that pay dividends to shareholders. In this article, we will further discuss the best energy dividend stocks to invest in.

Our Methodology:

For this list, we first selected dividend stocks from the S&P 500 Energy index and shortlisted stocks with dividend yields above 2.5%, as of February 25. These companies also pay regular dividends to shareholders. Next, these companies were sorted using Insider Monkey’s proprietary hedge fund sentiment data as of Q4 2022. The list is ranked in ascending order of the number of hedge funds having stakes in the companies.

Best Energy Dividend Stocks To Invest In

11. ONEOK, Inc. (NYSE:OKE)

Number of Hedge Fund Holders: 25

Dividend Yield as of February 25: 5.65%

ONEOK, Inc. (NYSE:OKE) is an American diversified company that specializes in the transmission of natural gas. On January 18, the company declared a 2.1% hike in its quarterly dividend to $0.955 per share. It has been making regular dividend payments to shareholders for the past 25 years. The stock has a dividend yield of 5.65%, as of February 25.

In January, JPMorgan upgraded ONEOK, Inc. (NYSE:OKE) to Overweight and also lifted its price target on the stock to $75. The firm mentioned that the company could benefit from the growing oil prices this year as well.

In addition to Exxon Mobil Corporation (NYSE:XOM), NextEra Energy, Inc. (NYSE:NEE), and Devon Energy Corporation (NYSE:DVN), OKE can be a good investment option for income investors.

As of the close of Q4 2022, 25 hedge funds tracked by Insider Monkey reported owning stakes in ONEOK, Inc. (NYSE:OKE), compared with 29 in the previous quarter. The collective value of these stakes is over $273.8 million. Among these hedge funds, Citadel Investment Group was the company’s leading stakeholder in Q4.

10. Kinder Morgan, Inc. (NYSE:KMI)

Number of Hedge Fund Holders: 34

Dividend Yield as of February 25: 6.36%

Kinder Morgan, Inc. (NYSE:KMI) is a Texas-based energy infrastructure company that owns and controls oil and gas pipelines. In December, Citigroup initiated its coverage of the stock with a Neutral rating and a $19 price target, appreciating the company’s constructive cash flow outlook.

On January 18, Kinder Morgan, Inc. (NYSE:KMI) declared a quarterly dividend of $0.2775 per share, in line with its previous dividend. The company is one of the best energy dividend stocks on our list as it maintains a 5-year streak of consistent dividend growth. The stock’s dividend yield on February 25 came in at 6.36%.

In the fourth quarter of 2022, Kinder Morgan, Inc. (NYSE:KMI) reported revenue of $4.6 billion, which showed a 3.4% growth from the same period last year. The company’s distributable cash flow for FY22 amounted to nearly $590 million.

At the end of December 2022, 34 hedge funds in Insider Monkey’s database owned investments in Kinder Morgan, Inc. (NYSE:KMI), worth over $1.11 billion collectively.

9. The Williams Companies, Inc. (NYSE:WMB)

Number of Hedge Fund Holders: 34

Dividend Yield as of February 25: 5.74%

The Williams Companies, Inc. (NYSE:WMB) is an Oklahoma-based company that deals in natural gas processing and transportation. In FY22, the company reported an adjusted net income of $2.22 billion, up 34% from 2021. The company’s cash flow from operations amounted to nearly $5 billion, showing a 24% year-over-year growth.

The Williams Companies, Inc. (NYSE:WMB), one of the best energy dividend stocks, currently pays a quarterly dividend of $0.425 per share. The stock has a dividend yield of 5.74%, as of February 25. The company has been raising its dividends consistently for the past six years.

In January, Capital Advisors appreciated the overall performance of The Williams Companies, Inc. (NYSE:WMB) and upgraded it to Overweight with a $36 price target.

As of the close of Q4 2022, 34 hedge funds tracked by Insider Monkey owned stakes in The Williams Companies, Inc. (NYSE:WMB), compared with 35 in the previous quarter. These stakes have a consolidated value of over $286.6 million.

Longleaf Partners mentioned The Williams Companies, Inc. (NYSE:WMB) in its Q2 2022 investor letter. Here is what the firm has to say:

“The Williams Companies, Inc. (NYSE:WMB) – US natural gas pipeline operator Williams contributed as it benefitted from positive natural gas tailwinds in the quarter. After scaling back the position in the first quarter, we sold the remaining position in the quarter as its price reached our appraisal value. This was a very successful investment that was extremely contrarian in 2019 and now has become much more consensus appreciated.”

8. Phillips 66 (NYSE:PSX)

Number of Hedge Fund Holders: 36

Dividend Yield as of February 25: 4.12%

Phillips 66 (NYSE:PSX) is an American multinational petroleum refineries company. On February 8, the company declared a quarterly dividend of $1.05 per share, up 8.2% from the previous dividend. This marked the company’s 12th consecutive year of dividend growth. The stock’s dividend yield on February 25 came in at 4.12%. PSX is among the best energy dividend stocks to invest in.

In the fourth quarter of 2022, Phillips 66 (NYSE:PSX) reported a strong cash position. The company generated $4.8 billion in operating cash flow. At the end of December 2022, it had over $6.1 billion available in cash and cash equivalents.

In January, Wells Fargo maintained an Overweight rating on Phillips 66 (NYSE:PSX) with a $127 price target. The firm called PSX its top pick among large-cap refineries.

Phillips 66 (NYSE:PSX) was a part of 36 hedge fund portfolios in Q4 2022, up from 34 in the previous quarter, as per Insider Monkey’s data. The stakes owned by these hedge funds have a total value of roughly $820 million. With over 1.7 million shares, Citadel Investment Group was the company’s leading stakeholder in Q4.

7. APA Corporation (NYSE:APA)

Number of Hedge Fund Holders: 43

Dividend Yield as of February 25: 2.6%

APA Corporation (NYSE:APA) is a Texas-based energy holding company that is involved in the exploration of hydrocarbons. Wells Fargo initiated its coverage on the stock with an Overweight rating and a $52 price target. The firm gave a positive outlook on the company’s performance.

In the fourth quarter of 2022, APA Corporation (NYSE:APA) reported revenue of $2.38 billion, which fell by 0.8% from the same period last year but beat Street estimates by $10 million. For FY23, the company maintained its capital upstream budget between $2 billion to $2.1 billion.

On February 3, APA Corporation (NYSE:APA) declared a quarterly dividend of $0.25 per share, having raised it by 100% in September 2022. The stock has a dividend yield of 2.6%, as of February 25.

At the end of Q4 2022, 43 hedge funds tracked by Insider Monkey reported owning stakes in APA Corporation (NYSE:APA), compared with 47 a quarter earlier. These stakes are valued at over $544.8 million collectively.

Ariel Investments mentioned APA Corporation (NYSE:APA) in its Q4 2022 investor letter. Here is what the firm has to say:

“Oil and natural gas explorer, APA Corporation (NASDAQ:APA) was the top contributor to relative returns in the period. Shares traded higher on strong U.S. well performance and upbeat guidance suggesting production is back on track in the North Sea and Egypt. Management also reiterated APA’s commitment to return 60% of free cash flow to shareholders through dividends and repurchases. In our view, this suggests significant buyback activity in the upcoming quarter, highlighting an attractive return of capital.”

6. Valero Energy Corporation (NYSE:VLO)

Number of Hedge Fund Holders: 47

Dividend Yield as of February 25: 3.07%

Valero Energy Corporation (NYSE:VLO) is a Texas-based downstream petroleum company that manufactures and markets transportation fuels. The company ceased raising its dividends during the pandemic of 2020 but maintained regular payouts through this period. On January 31, it announced a 4.1% hike in its quarterly dividend, for the first time since 2020. Its current quarterly dividend stands at $1.02 per share for a dividend yield of 3.07%, as of February 25.

Exxon Mobil Corporation (NYSE:XOM), NextEra Energy, Inc. (NYSE:NEE), and Devon Energy Corporation (NYSE:DVN) are other popular dividend stocks to consider in the energy sector.

RBC Capital raised its price target on Valero Energy Corporation (NYSE:VLO) in January with an Outperform rating on the shares, appreciating the company’s recent quarterly earnings. The firm noted that the company is benefitting from strong refining margins, which is expected to continue this year as well.

At the end of Q4 2022, 47 hedge funds tracked by Insider Monkey reported owning stakes in Valero Energy Corporation (NYSE:VLO), the same as in the previous quarter. The collective value of these stakes is $978.8 million.

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

Number of Hedge Fund Holders: 50
Dividend Yield as of February 25: 2.89%

EOG Resources, Inc. (NYSE:EOG) is an American energy company, based in Texas. The company is engaged in the exploration of hydrocarbons. In the fourth quarter of 2022, the company posted revenue of $6.7 billion, which showed an 11.3% growth from the same period last year. It generated over $1.7 billion in free cash flow during the quarter, which makes it one of the best energy dividend stocks on our list.

On February 23, EOG Resources, Inc. (NYSE:EOG) declared a quarterly dividend of $0.825 per share, consistent with its previous dividend. The company also announced a $1.0 per share in special dividends. The stock has a dividend yield of 2.89%, as of February 25.

Following the company’s recent quarterly earnings, Barclays maintained an Overweight rating on EOG Resources, Inc. (NYSE:EOG) in February, with a $145 price target.

As per Insider Monkey’s Q4 2022 database, 50 hedge funds owned stakes in EOG Resources, Inc. (NYSE:EOG), compared with 52 in the previous quarter. The collective value of these stakes is roughly $1.2 billion. Among these hedge funds, Harris Associates was the company’s leading stakeholder in Q4.

4. Devon Energy Corporation (NYSE:DVN)

Number of Hedge Fund Holders: 55
Dividend Yield as of February 25: 7.95%

An Oklahoma-based energy company, Devon Energy Corporation (NYSE:DVN) is next on our list of the best energy dividend stocks to invest in. On February 14, the company declared an 11% hike in its fixed dividend to $0.20 per share. It has been making uninterrupted dividend payments to shareholders since 1993. The stock’s dividend yield came in at 7.95% on February 25.

In the fourth quarter of 2022, Devon Energy Corporation (NYSE:DVN) reported revenue of $4.3 billion, up nearly 1% from the same period last year. The company’s operating cash flow for the quarter came in at $1.9 billion, up 18% from the prior-year period. Moreover, its free cash flow for FY22 reached its all-time high in the company’s 52-year operating history to $6 billion.

The number of hedge funds tracked by Insider Monkey owning stakes in Devon Energy Corporation (NYSE:DVN) grew to 55 in Q4 2022, from 51 in the previous quarter. The collective value of these stakes is over $823.5 million.

GoodHaven Capital Management mentioned Devon Energy Corporation (NYSE:DVN) in its Q2 2022 investor letter. Here is what the firm has to say:

“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had a material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is mostly variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”

3. Chevron Corporation (NYSE:CVX)

Number of Hedge Fund Holders: 57
Dividend Yield as of February 25: 3.72%

Chevron Corporation (NYSE:CVX) is one of the world’s largest energy companies. In February, it revived talks with Algeria to allow it to take up energy explorations in the country. This step was taken to compete for natural gas in areas dominated by European firms.

Chevron Corporation (NYSE:CVX), one of the best energy dividend stocks, has been growing its dividends consistently for the past 36 years. The company offers a quarterly dividend of $1.51 per share and has a dividend yield of 3.72%, as of February 25.

At the end of December 2022, 57 hedge funds tracked by Insider Monkey reported owning stakes in Chevron Corporation (NYSE:CVX), worth over $32.2 billion collectively.

Diamond Hill Capital mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm had to say:

“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”

2. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders: 67
Dividend Yield as of February 25: 5.07%

ConocoPhillips (NYSE:COP) specializes in petroleum refineries and crude oil. The company is headquartered in Texas, US. Highlighting the company’s Q4 earnings, Barclays raised its price target on the stock in January to $160 with an Overweight rating on the shares.

On February 2, ConocoPhillips (NYSE:COP) declared a quarterly dividend of $0.51 per share, which remained consistent with its previous dividend. The company also announced a variable return of cash of $0.60 per share, which is payable on April 14. It has been regularly paying dividends to shareholders since 1993, which places it as one of the best energy dividend stocks on our list.

At the end of December 2022, 67 hedge funds tracked by Insider Monkey held stakes in ConocoPhillips (NYSE:COP), up from 64 in the previous quarter. These stakes have a consolidated value of roughly $3 billion.

ClearBridge Investments mentioned ConocoPhillips (NYSE:COP) in its Q4 2022 investor letter. Here is what the firm has to say:

“The risk-on environment supported by China reopening drove strong returns for the energy sector, despite underlying commodity prices falling from recent highs. In the portfolio, leading E&P company ConocoPhillips (NYSE:COP) was again among the top contributors; it maintains one of the best balance sheets in the industry and continues to execute well while benefiting from being a low-cost producer and growing liquefied natural gas demand. ConocoPhillips is also investing in field electrification and carbon capture across its portfolio, with ambitions to deliver oil production with industry-low CO2 intensity.”

1. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 79
Dividend Yield as of February 25: 3.29%

Exxon Mobil Corporation (NYSE:XOM) tops our list of the best energy dividend stocks to invest in. The company maintains a 40-year streak of consistent dividend growth, becoming a source of regular income for shareholders. It currently offers a quarterly dividend of $0.91 per share and has a dividend yield of 3.29%, as of February 25.

The number of hedge funds owning stakes in Exxon Mobil Corporation (NYSE:XOM) grew to 79 in Q4 2022, from 75 a quarter earlier, according to Insider Monkey’s Q4 data. These stakes have a consolidated value of over $7.1 billion. Among these hedge funds, GQG Partners was the company’s leading stakeholder in Q4.

You can also take a look at 13 Most Profitable Food Stocks and 13 High Growth Pharma Stocks that are Profitable

Follow Insider Monkey on Twitter

Suggested articles:

• 11 Most Profitable Chinese Stocks
• 15 Most Profitable New Stocks Today
• 10 Best Stocks to Buy and Hold for a Lifetime

Disclosure. None. 11 Best Energy Dividend Stocks To Invest In is originally published on Insider Monkey.