One of President-elect Donald Trump’s announcements was his administration’s focus on energy dominance, intended to positively impact the energy sector. Oil production isn't a matter of turning on (or off) a tap. And with oil production already at all-time highs, it'll be interesting to see how much more supply the new administration can help create, and over what period. Regardless, I doubt output will be cut anytime soon.
This makes the energy sector a viable candidate for long-term portfolio holders—and what better way to capture a sector’s growth than by investing in its biggest, most generous players - and collect an income doing so.
How I Came Up With The Following Stocks
So, today, let’s look at the market's biggest, highest-yielding energy stocks. To get my list, I went to my favorite stock screener and used the following filters:
- Current Analyst Rating: 4 (Moderate Buy) to 5 (Strong Buy). Analyst ratings are always a good place to start when looking for stocks to buy. These ratings are averaged based on a 1-5 rating system.
- Annual Dividend Yield: Left blank so I can sort the results using this category.
- Market Capitalization: $200 billion and above. I meant it when I said biggest. Granted, some companies with smaller market caps offer high yields—Diamondback Energy being one example—but mega-cap companies have more exposure to the energy market and, therefore, can benefit more from increased demand.
- Market Sector: Oils-Energy
With these filters in place, I ran the analysis and got three results:
Now, let’s talk about these three energy giants, starting with the one with the highest yield:
Shell Plc ADR (SHEL)
Previously known as Royal Dutch Shell, Shell Plc is one of the largest multinational energy conglomerates in the world. It operates in various areas of the oil and gas sector, including exploration, production, refining, transportation, distribution, and marketing. The company also operates in petrochemicals and power generation.
According to its latest dividend announcement, the company pays 68.8 cents per share, or $2.752 annually, reflecting a 4.25% yield—the highest on this list.
That’s a decent yield, but I would be remiss not to mention that, unlike the other two on this list, Shell PLC does not hold any dividend titles for several reasons. First, it’s an ADR that was listed in 2022. Secondly, it cut its payouts during the pandemic.
To be fair, that was a unique set of circumstances that affected every sector in the market, and Shell initiated the dividend cut to ensure it didn’t sink as the global economy recovered—which it successfully did. That said, the company has been increasing its dividends since then. Furthermore, it holds a moderate buy rating from analysts with a high target price of $92.
Chevron Corp (CVX)
Chevron, a Dividend Aristocrat, is next on my list. The company operates in the oil and gas sector and covers upstream, downstream, and midstream activities. Through its Chevron Renewable Energy Group segment, it is increasing its investments in renewable energy. The company also operates Texaco and Caltex, some of the biggest service station brands in the world.
CVX stock is fast approaching its 52-week high at $167.11. Should investors avoid it until prices fall again before jumping in?
Not at all, according to analysts. CVX stock has a strong buy rating from 22 analysts, making it an attractive mega-cap energy stock. Chevron pays $6.52 annually, reflecting a 4.03% yield, and has a 37-year streak of increasing dividends that shows no indication of stopping anytime soon.
Exxon Mobil Corp (XOM)
Exxon Mobil is a vertically integrated energy company that operates worldwide. It covers the entire energy value chain, including exploration, production, refining, marketing, and chemical manufacturing, as well as upstream, midstream, and downstream sectors.
Exxon has paid increasing dividends for 42 years and has paid out consistently since 1881, ranking it as a Dividend Aristocrat, Zombie, and soon-to-be King.
Meanwhile, its current annual dividend yield is $3.96 after its latest increase, bringing XOM stock’s yield to 3.36%. That’s not a bad value proposition, considering the stock has performed well and returned 17.98% over the last year. It also has a moderate buy rating with an average score of 4.04.
Final Thoughts
The world needs energy more than ever as technology grows exponentially and new developments become more power-hungry. This makes the energy sector one of the safest investment spaces in the market, and these three giants (both in dividends and market cap) offer even more security through their consistent and reliable dividend payments. But remember, just because someone says a stock is good doesn’t mean you should blindly follow their lead. Do your due diligence, monitor the market for significant changes, and watch for other opportunities.
