10 Best Energy Dividend Stocks for Income Investors

If you’re interested in the energy sector and want to earn a steady stream of income from some of these stocks, then the 10 best energy dividend stocks for income investors will be great stock picks for you.

Several hedge funds that Insider Monkey tracks became upbeat about energy company stocks during the second quarter based on their recent wave of 13F filings. Over the next few pages, we have analyzed the best energy company stocks for investing based on that hedge fund sentiment. That’s what we do at Insider Monkey and our flagship strategy has returned 44.2% since February 2016 vs. a 29.6% gain for the S&P 500 index ETF (SPY). Our most recent stock picks, which were disclosed to our subscribers in the middle of February, beat the market by 5 percentage points in the three months that followed and our latest picks were released in the middle of May. Our system is easy for investors to implement, with just a small batch of trades to be executed once per quarter.

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With hundreds of publicly traded companies in the energy sector, there are lots of great stocks to buy that provide a steady income stream from dividends and other means. But for the purposes of this list, we only included energy companies that are part of the S&P 1500, because there are few better indicators of a company’s longevity than being part of the well-regarded index. Out of the 84 energy companies in the S&P 1500, 42 currently pay dividends. However, some of these stocks only pay out dividends worth as little as $0.04 per year, so they have little use for those interested in income investing.

For this list, we have only included energy company stocks with dividend yields of at least 3%. This requirement brings the list of good income investment energy stocks down to 17. From there, we ranked the stocks according to hedge fund sentiment as of the end of the first quarter of 2017. Head to the next page to discover the 10 best energy dividend stocks for income investors.

Also, be sure to check out Insider Monkey’s list of the 10 best blue chip dividend stocks in 2017.

10. Valero Energy Corporation (NYSE:VLO)

Independent petroleum refining and ethanol producing company Valero Energy Corporation (NYSE:VLO) is owned by 27 hedge funds in our database as of March 31, with their positions valued at $568.2 million. Out of 24 analysts with ratings on the company, 11 recommend a ‘Buy’ of the company’s stock, which is unsurprising given its 4.14% dividend yield.

9. Phillips 66 (NYSE:PSX)

An energy manufacturing and logistics company with a classical name, Phillips 66 (NYSE:PSX) also had 27 hedge funds long its shares at the end of March, with investments worth almost $7 billion. If you need further reason to buy into this stock, aside from the dividend yield of 3.39%, Warren Buffett himself took a 14.6% stake in the company in October 2016. You might not want to go against The Oracle on this one.

8. Hess Corp. (NYSE:HES)

Global oil and natural gas exploration and production company Hess Corp. (NYSE:HES) has nine ‘Strong Buy’ analyst recommendations, while 12 have a ‘Hold’ on it. 32 hedge funds that we track own a combined $1.4 billion in Hess shares as of the end of March, probably because the company’s 7.15% dividend yield is the highest among all S&P 1500 energy companies.

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7. Nabors Industries Ltd. (NYSE:NBR)

Land-based drilling rig operator Nabors Industries Ltd. (NYSE:NBR) enjoys the support of 37 hedge funds in our system, which have $432.1 million in holdings as of March 31. As late as April 2017, brokerage firms are bullish on the stock, with most of them having ‘Buy’ recommendations. The 3.15% dividend yield that the stock sports doesn’t hurt either.

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6. Occidental Petroleum Corporation (NYSE:OXY)

Oil and gas exploration and production company Occidental Petroleum Corporation (NYSE:OXY) is the beneficiary of a ‘Buy’ rating from Credit Suisse (among others), which is bullish on the company’s reserves and low cost. Occidental, which has a 5.12% dividend yield, is backed by 37 hedge funds as of the end of Q1, which have investments worth $750.2 million.

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The next five companies on this list of the 10 best energy dividend stocks for income investors are each owned by more than 45 hedge funds, an indication of the bullish sentiment towards these companies despite the uncertainty in the sector.

5. WPX Energy Inc (NYSE:WPX)

WPX Energy Inc (NYSE:WPX), a company that produces oil and natural gas in unconventional properties, enjoys the backing of 46 hedge funds, which have $1.2 billion invested in the company. Another thing that WPX enjoys is ‘Buy’ ratings from 19 brokerage analysts, who must have seen the company’s 6.46% dividend yield (on its convertible preferred stock) as quite favorable.

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4. Williams Companies Inc (NYSE:WMB)

Energy infrastructure company Williams Companies Inc (NYSE:WMB) is a good income investment stock, with a 3.79% dividend yield. The company also has 47 hedge fund shareholders from among those we track, including Steve Cohen’s family office Point72 Asset Management, which doubled its stake in the company late last year. Those hedgies have a collective $2 billion invested in the company.

3. Chevron Corporation (NYSE:CVX)

When someone talks about oil, Chevron Corporation (NYSE:CVX) is one of the first companies that comes to mind. That’s also the case for hedge funds, 49 of which have Chevron stakes worth $1.6 billion in aggregate. The stock, which has a 4.19% dividend yield, also gets a ‘Buy’ recommendation from 15 brokerage firms.

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2. Schlumberger Limited. (NYSE:SLB)

Oil exploration technology company Schlumberger Limited. (NYSE:SLB) is one of the energy darlings of the hedge fund community, with 54 hedge fund in our database having a total of $1.7 billion in shares of the company. Schlumberger also has 22 ‘Buy’ recommendations from brokerage analysts.

1. Exxon Mobil Corporation (NYSE:XOM)

Well known oil company Exxon Mobil Corporation (NYSE:XOM) has been a great income investment company, and it still seeks ways to grow value, as shown in its attempts to secure sanction waivers in connection to its joint venture in Russia. 56 hedge funds would agree with that assessment, given the $2.3 billion in Exxon Mobil shares they owned at the end of March, which currently sport a dividend yield of 3.86%.

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The stellar hedge fund backing for Exxon Mobil puts the energy company on top of this list of the 10 best energy dividend stocks for income investors.

Disclosure: None