In this article, we will take a look at some of the best dividend stocks from the energy sector.
The energy sector’s presence within the broader US stock market has fluctuated over time. In the 1970s, it accounted for around 15% of the market, whereas today, it represents just 3.2% of the broader index, as reported by U.S. Bancorp Investmentments. However, energy consumption has increased since the 1970s, and its significance has not diminished. According to analysts, from an economic standpoint, energy stocks hold a more substantial role in the broader market than their current index weighting suggests.
Also read: 10 Best Dow Jones Dividend Stocks According to Wall Street Analysts
Towards the end of 2024, energy sector stocks saw considerable fluctuations, rising by over 6% in November before declining nearly 10% in December. By the close of the year, the broader market’s energy sector, which had been up nearly 20% at its highest point, finished 2024 with a return of just 5.72%. This performance fell well behind the wider market. Rob Haworth, senior investment strategy director with U.S. Bank Asset Management, made the following comment about the performance of energy stocks:
“As 2024 came to a close, markets responded to the environment for energy prices. In part, it reflects concern that Oil Petroleum Exporting Countries+ (OPEC+) may soon boost production, which would add to an already solid supply situation. The oil market is one that remains well supplied but isn’t well demanded. Although the U.S. economy is strong, other major oil users like China and Europe are experiencing economic challenges. As a result, global oil demand is lagging.”
Although energy stocks fell short of investor expectations, global investment in the low-carbon energy transition grew by 11% in 2024, reaching a record $2.1 trillion, according to BloombergNEF’s (BNEF) Energy Transition Investment Trends 2025 report. This growth was largely driven by increased investment in electrified transportation, renewable energy, power grids, and energy storage, all of which hit new highs last year. However, while total investment in energy transition technologies set a new record, its growth rate was slower than in the previous three years, when annual increases ranged from 24% to 29%.
BNEF’s report also highlighted a clear divide between investment in well-established and emerging clean energy sectors. Proven technologies with scalable business models—such as renewables, energy storage, electric vehicles, and power grids—accounted for the bulk of 2024’s investment, totaling $1.93 trillion, a 14.7% increase. This growth persisted despite challenges from policy changes, higher interest rates, and an expected slowdown in consumer demand.
Even as oil prices decline, an increasing number of fossil fuel companies are allocating a larger share of their profits to shareholders, indicating a shift in focus away from reinvesting in oilfield development. Some major oil firms have even taken on debt to maintain shareholder payouts. According to Bloomberg, four of the world’s five oil supermajors borrowed a combined $15 billion between July and September 2024 to fund share buybacks, underscoring their commitment to rewarding investors. In addition, companies in the energy sector distributed over $49 billion in dividends during the third quarter of 2024, up from $32.2 billion three years ago, as reported by Janus Henderson. Given this, we will take a look at some of the best energy dividend stocks to buy now.
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Our Methodology:
For this list, we first scanned Insider Monkey’s database of 900 hedge funds, as of the third quarter of 2024. Our focus was on selecting energy companies across various sectors within the energy industry, including exploration and production, utilities, renewable energy, and oil refining and marketing. From this pool of companies, we identified 10 companies that prioritize distributing dividends to their shareholders and ranked them in ascending order of the number of hedge funds having stakes in them at the end of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 41
Devon Energy Corporation (NYSE:DVN) is an American leading natural gas and oil exploration and production company, based in Oklahoma. The company maintains a strong financial position with an investment-grade-rated balance sheet. Thanks to its low break-even point, it remains profitable even when oil prices are relatively low. In addition, it has more than a decade’s worth of drilling opportunities on its land.
Notably, Devon Energy Corporation (NYSE:DVN) expanded its portfolio in the second half of 2024 by acquiring additional onshore US assets. This move highlights not only its solid financial foundation but also its ability to grow through acquisitions. In essence, the company can serve as an industry consolidator, acquiring assets that may be too small to attract the interest of larger energy giants.
Devon Energy Corporation (NYSE:DVN) has a strong cash position, which makes it a reliable investment opportunity for income investors. In the most recent quarter, the company generated over $1.6 billion in operating cash flow, up from $1.5 billion in the previous quarter. It has been making regular dividend payments to shareholders since 1993, coming through as one of the best dividend stocks from the energy sector. The company offers a quarterly dividend of $0.22 per share and has a dividend yield of 4.37%, as of February 8.
At the end of Q3 2024, 41 hedge funds in Insider Monkey’s database held stakes in Devon Energy Corporation (NYSE:DVN), compared with 52 in the previous quarter. These stakes have a total value of over $793.5 million.
9. Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 42
Kinder Morgan, Inc. (NYSE:KMI) is a Texas-based energy infrastructure company that owns and operates oil and gas pipelines and terminals. The company remains optimistic about its performance, projecting a 9% increase in adjusted earnings per share this year. This growth is driven by fewer obstacles from asset sales and major contract renewals, as well as the positive impact of recent expansion efforts, including the late-year acquisition of STX Midstream.
Looking ahead, Kinder Morgan, Inc. (NYSE:KMI)’s long-term growth prospects have significantly improved. The company has secured several large natural gas pipeline projects scheduled to start operations in 2028, while a series of smaller projects set to launch soon has further strengthened and extended its growth momentum. The stock has surged by nearly 63% over the past 12 months, significantly outperforming the broader market.
Kinder Morgan, Inc. (NYSE:KMI)’s cash generation makes it an attractive option for income investors. This cash position allows it to comfortably support its dividend payments. In the latest quarter, the company reported $1.5 billion in operating cash flow and $700 million in free cash flow. Currently, it pays a quarterly dividend of $0.2875 per share for a dividend yield of 4.25%, as of February 8. It is one of the best dividend stocks on our list as the company has raised its payouts for seven consecutive years.
As of the close of Q3 2024, 42 hedge funds tracked by Insider Monkey held stakes in Kinder Morgan, Inc. (NYSE:KMI), up from 41 in the previous quarter. The consolidated value of these stakes is more than $1.3 billion. With over 18.2 million shares, Orbis Investment Management was the company’s leading stakeholder in Q3.
8. Baker Hughes Company (NASDAQ:BKR)
Number of Hedge Fund Holders: 45
Baker Hughes Company (NASDAQ:BKR) provides oilfield services, products, technology, and systems to the global oil and natural gas sector. With four decades of experience in the LNG industry, the company is well-positioned to capitalize on the growing LNG infrastructure in the US. Recently, the company secured an order from Bechtel Energy to provide gas technology equipment for two liquefaction plants as part of the initial phase of Woodside Energy Group Ltd’s Louisiana LNG development project. In the past 12 months, the stock has surged by over 57%.
Baker Hughes Company (NASDAQ:BKR) reported strong earnings in the fourth quarter of 2024. The company posted revenue of $7.4 billion, which showed an 8% growth from the same period last year. IET secured $3.8 billion in orders during the quarter, driven by robust LNG demand and an additional gas infrastructure contract. With this strong finish to the year, total orders for 2024 reached $13 billion, marking the second-highest annual order volume in the company’s history. This performance underscores the company’s diversified end markets and the adaptability of its portfolio.
Baker Hughes Company (NASDAQ:BKR)’s cash position also remained stable. The company reported an operating cash flow of nearly $1.2 billion in Q4 and its free cash flow amounted to $894 million. On January 30, the company declared a 10% increase in its quarterly dividend to $0.23 per share. This marked the company’s fourth consecutive year of dividend growth, which makes BKR one of the best dividend stocks from the energy sector. The stock supports a dividend yield of 1.99%, as of February 8.
The number of hedge funds tracked by Insider Monkey owning stakes in Baker Hughes Company (NASDAQ:BKR) grew to 45 in Q3 2024, from 41 in the previous quarter. These stakes are collectively valued at over $1.2 billion. Among these hedge funds, AQR Capital Management was the company’s leading stakeholder in Q3.
7. Duke Energy Corporation (NYSE:DUK)
Number of Hedge Fund Holders: 46
Duke Energy Corporation (NYSE:DUK) is an American electric power and natural gas holding company that is primarily involved in the generation, transmission, distribution, and sale of electricity. The company’s utility portfolio operates under government regulation, which determines its rates and guarantees a stable revenue stream. This consistency provides dependable cash flow to support both dividend distributions and business expansion. The company is making strategic investments to enhance its operations while also working to reduce carbon emissions. Analysts expect that these initiatives will drive annual earnings per share growth of 5% to 7% through 2028, a solid rate for a leading utility. This positive growth trajectory strengthens Duke Energy’s ability to maintain and gradually raise its dividend over time.
Duke Energy Corporation (NYSE:DUK) is making significant investments in strengthening and modernizing its power grid. In 2023 alone, the company allocated over $4 billion toward grid improvements, including selective undergrounding of power lines, upgrading utility poles, and implementing self-healing technology. These upgrades have enhanced grid reliability, preventing nearly 550,000 customer outages and reducing downtime by 7 million hours during recent hurricanes. Moving forward, the company intends to maintain its focus on infrastructure upgrades, with grid-related projects making up half of its planned $73 billion capital expenditures over the next five years.
Duke Energy Corporation (NYSE:DUK) is a reliable stock for income investors because of its stable cash position. In its most recent quarter, the company had $376 million available in cash and cash equivalents. In the first nine months of FY24, it generated $8.95 billion in operating cash flow, showing an increase from $7.31 billion in the same period last year. The company has never missed a dividend in 98 years and also maintains a 13-year streak of consistent dividend growth, which makes DUK one of the best dividend stocks on our list. Its quarterly dividend comes in at $1.045 per share and has a dividend yield of 3.64%, as of February 8.
The hedge fund sentiment around Duke Energy Corporation (NYSE:DUK) remained positive in Q3 2024 as 46 funds tracked by Insider Monkey held stakes in the company, up from 37 in the previous quarter. The consolidated value of these stakes is over $1.66 billion. Among these hedge funds, GQG Partners was the company’s leading stakeholder in Q3.
6. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 63
Chevron Corporation (NYSE:CVX) ranks sixth on our list of the best dividend stocks from the energy sector. The American multinational energy company manufactures and sells a range of high-quality refined products. It recently announced a partnership focused on creating scalable power solutions using natural gas-fired turbines, incorporating carbon capture and storage to support the growing energy demands of US data centers. In addition, the company successfully launched gas production from the Sanha Lean Gas Connection project, securing a reliable natural gas supply for the Angola Liquefied Natural Gas facility. CVX has surged by over 4% since the start of 2025.
In 2024, Chevron Corporation (NYSE:CVX) delivered an exceptional performance, setting new records. Global production rose by 7%, while US output saw a remarkable 19% increase, reaching all-time highs. Looking ahead to 2025, growth is expected to continue, supported by the full-year impact of its PDC Energy acquisition, finalized in August 2023. In addition, key project launches in the Gulf of Mexico and continued expansion in the Permian Basin—where production grew by 18%—further strengthened its overall performance.
Chevron Corporation (NYSE:CVX) maintained a strong cash position in FY24. The company generated an operating cash flow of $31.5 billion and a free cash flow of $15 billion. It returned almost $12 billion to shareholders in the form of dividends. Moreover, the company repurchased over $15 billion of its own shares in 2024, continuing its long-standing practice of share buybacks, which it has done in 17 of the past 21 years. It currently pays a quarterly dividend of $1.71 per share, having raised it by 4.9% in January. This marked the company’s 38th consecutive year of dividend growth. The stock supports a dividend yield of 4.48%, as of February 8.
Chevron Corporation (NYSE:CVX) was included in 63 hedge fund portfolios at the end of Q3 2024, compared with 64 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds are worth more than $21 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.
5. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 66
ConocoPhillips (NYSE:COP) is a Texas-based multinational company that is engaged in hydrocarbon exploration and production. The company’s portfolio is diverse, encompassing unconventional oil projects in the US, conventional oil sources, liquefied natural gas (LNG) initiatives, and oil sands. With a large reserve base, it is well-positioned for sustained production and future growth, which is vital for maintaining economic stability and a competitive edge in the ever-changing energy market.
Recently, ConocoPhillips (NYSE:COP) has focused on improving operational efficiencies and expanding its LNG capabilities. Key factors driving its success include strong cost control, effective integration of acquisitions, and progress in low-carbon technologies. The company is dedicated to reducing its carbon footprint and earned the Oil and Gas Methane Partnership 2.0 Gold Standard recognition in 2024.
ConocoPhillips (NYSE:COP) saw a significant increase in production during the fourth quarter, rising 14.8% year-over-year to 2,183 thousand barrels of oil equivalent per day (MBOED). This growth was driven by successful strategic acquisitions, including the notable purchase of Marathon Oil, completed in November 2024. The company’s cash position also came in strong as it generated $20.1 billion in operating cash flow in FY24 and cash from operations amounted to $20.3 billion.
ConocoPhillips (NYSE:COP) distributed $3.6 billion to shareholders through dividends. The company offers a quarterly dividend of $0.78 per share, having raised it by 34% in October. This marked the company’s 10th consecutive year of dividend growth, which makes COP one of the best dividend stocks on our list. The stock’s dividend yield on February 8 came in at 3.17%.
According to Insider Monkey’s database of Q3 2024, 66 hedge funds were bullish on ConocoPhillips (NYSE:COP). The stakes owned by these hedge funds are worth nearly $5 billion.
3. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 69
NextEra Energy, Inc. (NYSE:NEE) is an American renewable energy company. Its adjusted earnings per share (EPS) grew by approximately 2% year-over-year in the fourth quarter of 2024, while for the full year, it saw an 8.2% increase. The company is aiming for adjusted EPS growth of 6% to 8% through 2027, meaning it achieved the upper end of its target in 2024.
Both of its segments—utility and renewable energy—contributed to NextEra Energy, Inc. (NYSE:NEE)’s performance in 2024. The company owns the largest electric utility in the US, Florida Power & Light Company, and is the world’s largest producer of wind and solar energy, as well as a global leader in battery storage.
NextEra Energy, Inc. (NYSE:NEE) has a strong foundation and is also home to one of the largest global portfolios of solar and wind power assets. This segment has gained from the global move away from fossil fuels towards cleaner, renewable energy. With the ongoing shift to renewable power, the company is well-equipped for continued growth in the coming decades. In the past 12 months, the stock has surged by over 21%.
NextEra Energy, Inc. (NYSE:NEE) is a strong dividend payer thanks to its stable cash position. In FY24, the company generated over $13.2 billion in operating cash flow. In addition, the company expects to increase its dividends per share by approximately 10% annually through at least 2026, starting from a 2024 base. It currently offers a quarterly dividend of $0.515 per share and has a dividend yield of 3.02%, as of February 8. With a dividend growth streak of 28 years under its belt, NEE is one of the best dividend stocks from the energy sector.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 69 funds held stakes in NextEra Energy, Inc. (NYSE:NEE), compared with 73 in the previous quarter. The consolidated value of these stakes is more than $2.47 billion. Rajiv Jain’s GQG Partners was the company’s leading stakeholder in Q3.
3. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 71
Occidental Petroleum Corporation (NYSE:OXY) is an American company that is engaged in the exploration of hydrocarbons and chemical manufacturing. In the past year, the stock has declined by over 19%, highlighting uncertainty around the stock’s performance. Investor sentiment stayed cautious as Occidental’s debt levels rose while crude oil prices fell. The stock saw its steepest decline in the latter half of 2024, coinciding with the company’s $12 billion acquisition of CrownRock in August. The deal included $1.2 billion of CrownRock’s existing debt, with Occidental raising nearly $9 billion in new debt to finance the purchase.
The acquisition greatly expanded Occidental Petroleum Corporation (NYSE:OXY)’s debt load, and the decline in crude oil prices towards the end of the year raised investor concerns. Many feared that lower oil prices would hurt the company’s earnings and cash flow while increasing interest expenses added to their unease.
That being said, investing in Occidental Petroleum Corporation (NYSE:OXY) could still be a worthwhile consideration, as it has several strengths. The company has established itself as a forward-thinking leader in the energy sector through substantial investments in carbon capture technology, supporting global energy transition goals. While an immediate rise in oil prices might not be expected, the company’s strong cash flow, sound management, and strategic approach set it up well for future growth. For long-term investors, OXY offers an attractive balance of risk and reward at its current valuation, making it a promising opportunity despite market volatility.
In addition, Occidental Petroleum Corporation (NYSE:OXY)’s dividend policy makes it a solid investment option. The company has been making regular dividend payments to shareholders for the past 45 years. It currently pays a quarterly dividend of $0.22 per share and has a dividend yield of 1.88%, as of February 8.
The number of hedge funds tracked by Insider Monkey owning stakes in Occidental Petroleum Corporation (NYSE:OXY) jumped to 71 in Q3 2024, from 62 in the previous quarter. These stakes are collectively valued at over $15.3 billion.
2. Hess Corporation (NYSE:HES)
Number of Hedge Fund Holders: 75
Hess Corporation (NYSE:HES) is a New York-based independent energy company focused on exploring and producing crude oil and natural gas. In the fourth quarter of 2024, the company reported better-than-expected adjusted EPS of $1.76, with revenue and non-operating income totaling $3.23 billion, surpassing the forecast of $2.94 billion. This strong performance was mainly driven by higher production, especially from the Guyana and Bakken regions. The company’s revenue for the quarter came in at $3.23 billion, up 6.2% from the same period last year.
Recently, Hess Corporation (NYSE:HES) has focused on increasing production capacity, especially in Guyana, where major discoveries have enhanced output potential. Operational efficiency and strategic investments, such as the Floating Production Storage and Offloading (FPSO) units in Guyana, are key factors driving the company’s growth.
In Q4 2024, Hess Corporation (NYSE:HES) reported an operating cash flow of over $1.3 billion. The company ended the quarter with $1.2 billion available in cash and cash equivalents. It is one of the best dividend stocks on our list as the company has been paying uninterrupted dividends to shareholders for the past 38 years. It currently pays a quarterly dividend of $0.50 per share and has a dividend yield of 1.40%, as of February 8.
As per Insider Monkey’s database of Q3 2024, 75 hedge funds held stakes in Hess Corporation (NYSE:HES), up from 73 in the previous quarter. These stakes are worth nearly $8 billion in total. With over 10.7 million shares, Adage Capital Management was the company’s leading stakeholder in Q3.
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
An American oil and gas company, Exxon Mobil Corporation (NYSE:XOM) is engaged in the exploration, production, refining, and distribution of petroleum products. The company continues to be a dominant force in the global fossil fuel industry while also increasing its focus on low-carbon energy. As part of its 2030 strategy, the company plans to invest up to $30 billion in low-emission projects between 2025 and 2030. In addition, it has secured the largest offshore carbon dioxide storage site in the U.S. through a partnership with the Texas General Land Office. The company is also advancing the development of the world’s largest low-carbon hydrogen production facility, expected to have a capacity of up to 1 billion cubic feet of hydrogen per day.
In the fourth quarter of 2024, Exxon Mobil Corporation (NYSE:XOM) reported revenue of $83.4 billion, a 1.1% decline from the same period the previous year. Since 2019, the company has achieved $12.1 billion in Structural Cost Savings, outpacing its competitors and more than offsetting inflation and growth. Its return on capital employed for the year was the best in the industry at 12.7%, with a five-year average of 10.8%.
Exxon Mobil Corporation (NYSE:XOM)’s cash position in FY24 remained strong, generating $55 billion in free cash flow, its third-best year in the past decade. The company’s free cash flow for the year totaled $36.2 billion. During the year, it returned $16.7 billion to shareholders through dividends and plans to extend its annual $20 billion share repurchase program through 2026. It currently pays a quarterly dividend of $0.99 per share and has a dividend yield of 3.64%, as of February 8. It is one of the best dividend stocks on our list as the company has raised its payouts for 42 consecutive years.
Insider Monkey’s database of Q3 2024 indicated that 86 hedge funds owned stakes in Exxon Mobil Corporation (NYSE:XOM), compared with 92 a quarter earlier. These stakes have a total value of nearly $7 billion. First Eagle Investment Management was one of the company’s leading stakeholders.
Overall Exxon Mobil Corporation (NYSE:XOM) ranks first on our list of the best dividend stocks from the energy sector. While we acknowledge the potential for XOM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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