In this article, we discuss 5 best energy dividend stocks to buy now. If you want to read our detailed analysis of the energy sector’s performance and other energy dividend stocks, go directly to read 10 Best Energy Dividend Stocks to Buy Now.
5. Valero Energy Corporation (NYSE:VLO)
Dividend Yield as of October 23: 3.07%
Valero Energy Corporation (NYSE:VLO) is an American petroleum refineries company that also specializes in petrochemical products and power. In Q2 2022, the company reported an operating cash flow of $5.8 billion, compared with $1.4 billion during the same period last year. The company’s free cash flow jumped to $5.4 billion, from $986 million in the prior-year period.
Though Valero Energy Corporation (NYSE:VLO) has not raised its dividends since 2019, the company maintained its payouts during these years. It currently pays a quarterly dividend of $0.98 per share for a dividend yield of 3.07%, as of October 23. The company has a healthy payout ratio of 22.59%.
As Jefferies started covering major oil and gas stocks, the firm initiated its coverage on Valero Energy Corporation (NYSE:VLO) this October with a Buy rating and a $147 price target.
At the end of June 2022, 43 hedge funds in Insider Monkey’s database reported owning stakes in Valero Energy Corporation (NYSE:VLO), down from 47 in the previous quarter. These stakes have a total value of nearly $760 million. With roughly 2 million shares in the company, Millennium Management was its largest stakeholder in Q2.
4. Chevron Corporation (NYSE:CVX)
Dividend Yield as of October 23: 3.28%
An American multinational energy company, Chevron Corporation (NYSE:CVX) is up 45.2% year-to-date and delivered a 52.1% return to shareholders in the last 12 months, as of the market close of October 21. The company is one of the best dividend stocks on our list as it has been raising its dividends consistently for the past 35 years. Currently, it pays $1.42 per share in dividends every quarter and has a dividend yield of 3.28%, recorded on October 23.
In September, Piper Sandler raised its price target on Chevron Corporation (NYSE:CVX) to $190 and kept an Overweight rating on the shares, highlighting the company’s strategic priorities. The firm presented a positive stance on integrated oil companies.
In the second quarter of 2022, Chevron Corporation (NYSE:CVX) posted strong cash generation with $13.7 billion in operating cash flow and $10.6 billion in free cash flow. The company’s payout ratio for the quarter came in at 36.8%.
The number of hedge funds tracked by Insider Monkey owning stakes in Chevron Corporation (NYSE:CVX) grew to 59 in Q2 2022, from 53 in the previous quarter. The collective value of these stakes is over $26 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q2.
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.”
3. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of October 23: 3.33%
Exxon Mobil Corporation (NYSE:XOM) is one of America’s leading energy companies which sells its products worldwide. The company’s shareholder return remain strong in its most recent quarter as it generated $17 billion in free cash flow and distributed $3.7 billion in dividends. This takes the company’s payout ratio to 38.4%.
Exxon Mobil Corporation (NYSE:XOM) has been growing its dividends consistently for 39 years, which makes it one of the best dividend stocks from the energy sector. Over these years, the company has raised its dividends at a CAGR of 6%. It currently pays a quarterly dividend of $0.80 per share and has a dividend yield of 3.33%, as of October 23.
In October, Jefferies upgraded Exxon Mobil Corporation (NYSE:XOM) to Buy while lifting the stock’s price target to $133. The firm appreciated the company’s investment throughout the cycle which would lead to growth in its segments.
At the end of Q2 2022, 72 hedge funds tracked by Insider Monkey owned stakes in Exxon Mobil Corporation (NYSE:XOM), compared with 83 in the previous quarter. The collective value of these stakes is over $7.4 billion. GQG Partners was the company’s leading stakeholder in Q2.
First Eagle Investments mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q2 2022 investor letter. Here is what the firm has to say:
“Integrated oil and gas giant Exxon Mobil 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 industrywide 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.”
2. ConocoPhillips (NYSE:COP)
Dividend Yield as of October 23: 3.57%
ConocoPhillips (NYSE:COP) is a Texas-based natural gas liquids company that also deals in the exploration and production of hydrocarbons. Since the beginning of this year, the stock has delivered a 68.7% return to shareholders, while its 12-month returns came in at 62.6%, as of the close of October 21.
ConocoPhillips (NYSE:COP) is one of the best dividend stocks on our list as the company has been making consistent dividend payments since 1993. It currently pays a quarterly dividend of $0.46 per share and has a dividend yield of 3.57%, as of October 23.
In October, Citigroup raised its price target on ConocoPhillips (NYSE:COP) to $132 with a Buy rating on the shares, ahead of the company’s Q3 results.
At the end of Q2, 71 hedge funds tracked by Insider Monkey owned stakes in ConocoPhillips (NYSE:COP), up from 67 in the previous quarter. The collective value of those stakes was over $2.42 billion. With over 6.7 million shares, Fisher Asset Management owned the largest position in the energy company in Q2.
Smead Capital Management mentioned ConocoPhillips (NYSE:COP) in its Q3 2022 investor letter. Here is what the firm has to say:
“Our top-performing stocks in the quarter includes Conoco (NYSE:COP). Oil and gas have been the best game in the stock market town this year and it was a pleasant surprise to see home builders pick up even with dour news on interest rates and the economy. For the first three quarters of the year, we should change the name of our fund to the Jed Clampett Fund. Conoco (NYSE:COP) was one of the standouts. Up through the bear market came a “bubblin’ crude!””
1. Devon Energy Corporation (NYSE:DVN)
Dividend Yield as of October 23: 6.27%
Devon Energy Corporation (NYSE:DVN), an Oklahoma-based energy company, has been raising its dividends consistently for the past six years. Moreover, it has paid dividends to shareholders consistently for 29 years. The company currently pays a quarterly dividend of $1.55 per share, with a dividend yield of 6.27%, as of October 23.
In October, Citigroup raised its price target on Devon Energy Corporation (NYSE:DVN) to $80 and maintained its Buy rating on the shares before the company’s Q3 results.
At the end of June 2022, 57 hedge funds tracked by Insider Monkey owned stakes in Devon Energy Corporation (NYSE:DVN), compared with 66 in the previous quarter. These stakes are collectively valued at $1.48 billion. With roughly 15 million DVN shares, GQG Partners was the company’s leading stakeholder in Q2.
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.”
You can also take a look at 10 Best Telecom Dividend Stocks to Buy for 2022 and 10 Best MLP Dividend Stocks to Buy
