We recently published a list of the 10 Energy Stocks with Fat Dividends. In this article, we are going to take a look at where Valero Energy Corporation (NYSE:VLO) stands against other best energy dividend stocks.
After a promising start to the year, the energy industry has once again declined after finding itself right in the crosshairs of President Trump’s tariff war. At the time of writing this piece, the broader energy sector has fallen by 5.48% since the beginning of 2025, against declines of almost 10% by the overall market.
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Short-sellers marginally increased their bets against oil and gas stocks last month, with short interest in the energy sector reaching 2.58%, compared to 2.52% in February. The most shorted industry within the sector was Oil & Gas Equipment & Services, primarily due to the tariffs imposed by the Trump administration on steel and aluminum imports. This is all despite the fact that global crude prices rose 4.5% in March. The sharp plunge in crude oil price in April, with the West Texas Intermediate (WTI) price currently hovering below $65, has only added to the sector’s problems.
However, even as crude prices decline and the growth in global oil demand slows down, an increasing number of fossil fuel companies remain committed to shareholders and have increased their returns to record levels. A report by Janus Henderson has revealed that operators in the energy sector distributed over $49 billion in dividends during the third quarter of 2024, up from $32.2 billion three years ago. According to Bloomberg, four of the world’s five oil supermajors even resorted to borrowing a combined $15 billion between July and September 2024 to fund share buybacks, underscoring their commitment to rewarding investors.
However, maintaining such high levels of payouts can only come from sustainable growth, which these energy giants have currently found in the form of natural gas. In contrast to oil, the benchmark US natural gas price at Henry Hub has surged by over 115% over the last year. Moreover, the US Energy Information Administration expects the US gas demand to reach record highs this year and the next, and a major factor driving this growth is the country’s LNG exports.
The United States of America is the largest LNG exporter in the world, with exports growing consistently over the last decade, from 0.5 Bcf/d in 2016 to 11.9 Bcf/d in 2024. The LNG sector has also received significant support from the Trump administration, further boosting these export figures this year. The European Union remains the top destination for American LNG, which has replaced nearly half of the Russian gas supply to the continent after the outbreak of war in Ukraine. Moreover, an increasing number of countries are now also looking to increase the imports of US LNG to reduce trade imbalances and put themselves in a better negotiating position with regard to President Trump’s tariffs. A great example is how Indian state-run GAIL has recently gone out to tender to buy an up to 26% stake in an LNG project in the United States, bundling the offer with a 15-year gas import deal and aiding New Delhi’s efforts to narrow its trade surplus with Washington.
Massive storage tanks filled with crude oil and diesel fuels at an oil refinery.
Our Methodology
To collect data for this article, we screened for companies operating in the energy sector and then picked out companies with the highest dividend yields as of April 18, 2025, and that have maintained their dividend policies over the last few years. The following are the Best Energy Stocks with High Dividend Yields.
At Insider Monkey, we are obsessed with 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Valero Energy Corporation (NYSE:VLO)
Dividend Yield as of April 18: 4.11%
Next on our list of the Best Energy Dividend Stocks is Valero Energy Corporation (NYSE:VLO), the largest independent petroleum refiner in the world and a leading producer of low-carbon transportation fuels. The company has 15 refineries in the US, Canada, and the UK, with a total throughput capacity of approximately 3.2 million barrels per day.
Despite a tough business environment for the refining sector, Valero Energy Corporation (NYSE:VLO) topped forecasts in Q4 2024. The company posted an adjusted EPS of $0.64, far above analysts’ estimates of $0.06. The quarterly revenue of $30.76 billion also beat expectations by $733.14 million, despite being down 13.15% YoY. VLO’s refining segment reported operating income of $437 million for Q4 2024, compared to $1.6 billion for the same period in 2023. Meanwhile, the renewable diesel segment posted strong growth, reporting $170 million of operating income for the quarter, up by 102% YoY.
Despite the setbacks, Valero Energy Corporation (NYSE:VLO) returned $4.3 billion to shareholders in 2024, representing a strong payout ratio of 78%. The company increased its quarterly cash dividend by 6% in January, further demonstrating its strong commitment to shareholders and placing it among the 13 Best Natural Gas and Oil Dividend Stocks To Buy.
Overall, VLO ranks 8th on our list of the best energy stocks with fat dividends. While we acknowledge the potential of VLO as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than VLO but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
