3 High-Dividend Energy Stocks With Long-term Potential

High-dividend energy companies benefit investors with additional income from regular dividends along with wide long-term potential.

So, it could be wise to invest in high-dividend energy stocks Exxon Mobil Corporation (XOM), Valero Energy Corporation (VLO), and Chevron Corporation (CVX), having long-term potential.

The global energy market is one of the most integral segments of the worldwide economy, owing to its significant contribution. The energy market is also an ideal alternative for investment purposes, as most energy-producing companies yield high dividends that benefit investors.

Benchmark oil prices jumped sharply in early October amid the potential of oil supply risks due to escalating tensions between Israel and Iran, fueling fears of a broader Middle East conflict and disruptions to Iranian exports. The world oil demand is expected to expand to 900 kb/d in 2024 and close to 1 mb/d in 2025.

Further, with contributing factors like increasing investment in the energy and power sector by government bodies, rising demand for oil in the commercial and residential sector, technological advancements, and growing investments in upstream projects, the global oil exploration and production market is expected to grow to reach around $5.12 trillion by 2031, at a CAGR of 5.2%.

Therefore, high-dividend energy stocks have a high potential to deliver stability and less volatility compared to other stocks, given the market conditions. The following well-established energy companies with stable earnings, rewarding dividend payouts, and long-term potential are suitable portfolio additions for investors.

Considering the industry’s conducive trends, let’s delve into the fundamentals of the top Energy – Oil & Gas stocks, beginning with number 3.

Stock #3: Exxon Mobil Corporation (XOM)

XOM is engaged in the exploration and production of crude oil and natural gas internationally. The company operates through Upstream; Energy Products; Chemical Products; and Specialty Products segments.

On November 1, XOM declared a fourth-quarter dividend of $0.99 per share, reflecting an increase of 4%, to be paid on December 10, 2024, to shareholders of record at the close of business on November 14, 2024.

XOM pays an annual dividend of $3.96, which equates to a yield of 3.27% at the current share price. Its four-year average dividend yield is 4.35%. And the company’s dividend payouts have increased at a CAGR of 3% over the past three years. XOM has raised its dividends for 25 consecutive years.

On October 10, XOM secured the largest carbon dioxide (CO2) storage lease site in the U.S. The site, which expands over 271,000 acres, complements XOM's onshore CO2 storage portfolio development and further solidifies the U.S. Gulf Coast as a leader in carbon capture and storage (CCS).

On September 4, His Highness Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council, witnessed the signing of an agreement under which ADNOC acquired a 35% equity stake in XOM’s proposed low-carbon hydrogen and ammonia production facility in Baytown, Texas.

The agreement reflects a significant investment in U.S. energy production and the global energy transition. It will support companies' net zero ambitions, accelerate the decarbonization of hard-to-abate sectors, and cater to the growing demand for low-carbon hydrogen and ammonia.

XOM’s total revenues and other income came in at $90.02 billion for the third quarter that ended September 30, 2024. Net income attributable to ExxonMobil amounted to $8.61 billion, while its EPS was $1.92 for the quarter, respectively.

Furthermore, the company’s total assets were $461.92 billion as of September 30, 2024, compared to $376.32 billion as of December 31, 2023.

Street expects XOM’s revenue for the fourth quarter (ending December 2024) to grow 7.1% year-over-year to $90.37 billion. For the fiscal year 2024, the company’s revenue is expected to grow 3.1% year-over-year to $355.25 billion. Moreover, the company surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.

Over the past six months, XOM’s stock has gained 4.3% and 17.7% over the past year to close the last trading session at $121.11.

XOM’s POWR Ratings reflect its robust outlook. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

XOM has a B grade for Quality, Momentum, and Stability. It is ranked #38 out of 77 stocks in the Energy – Oil & Gas industry.

In addition to the POWR Ratings we’ve stated above, we also have other XOM ratings for Sentiment, Growth, and Value. Get all XOM ratings here.

Stock #2: Valero Energy Corporation (VLO)

VLO manufactures, markets, and sells petroleum-based and low-carbon liquid transportation fuels and petrochemical products internationally. The company operates in Refining; Renewable Diesel; and Ethanol segments.

On October 29, VLO's Board of Directors declared a regular quarterly cash dividend on common stock of $1.07 per share. The dividend will be paid on December 20, 2024, to holders of record at the close of business on November 20, 2024.

VLO’s annual dividend payout of $4.28 translates to a yield of 3.13% at the current share price. Its four-year average dividend yield is 4%. Also, the company’s dividend payouts have grown at 3.9% CAGR over the past five years.

During the third quarter, which ended September 30, 2024, VLO posted revenues of $32.88 billion, and its operating income was $507 million for the same quarter. Also, adjusted net income attributable to Valero Energy Corporation stockholders and EPS came in at $364 million and $1.14 for the quarter, respectively.

Street expects VLO’s EPS for the second quarter (ending June 2025) to increase 16.9% year-over-year to $3.17. Its EPS for the fiscal year 2025 is expected to increase 18.5% year-over-year to $10.19. Furthermore, the company has topped the consensus EPS estimates in all of the trailing four quarters.

Over the past year, VLO’s stock has gained 12.4% to close the last trading session at $136.69.

VLO’s sound fundamentals are reflected in its POWR Ratings. The stock has a B grade for Quality. Within the Energy – Oil & Gas industry, VLO is ranked #34 of 77 stocks.

Click here to access other ratings of VLO for Sentiment, Growth, Momentum, Stability, and Value.

Stock #1: Chevron Corporation (CVX)

CVX engages in integrated energy and chemicals operations internationally. The company operates through two segments, Upstream; and Downstream. The company explores, develops, produces, and transports crude oil and natural gas. It is also in the processing, liquefaction, transportation, and regasification of liquefied natural gas.

On November 1, CVE’s Board of Directors declared a quarterly dividend of $1.63 per share, payable on December 10, 2024, to all holders of common stock at the close of business on November 18, 2024.

CVX pays an annual dividend of $6.52, which translates to a yield of 4.15% at the current share price. Its four-year average dividend yield is 4.15%. Moreover, the company’s dividend payouts have increased at a CAGR of 6.8% over the past three years. CVX has raised its dividends for 36 consecutive years.

On October 1, CVX announced a strategic collaboration with Honeywell International Inc. (HON) to develop advanced artificial intelligence (AI)-Assisted solutions that will assist operators in making decisions to enhance efficiency for refining processes and improve safety within the industrial automation space.

The strategic collaboration is aimed at enhancing refining operations, optimizing productivity, and increasing reliability to accelerate the journey toward autonomous operations.

During the third quarter that ended September 30, 2024, CVX reported total revenues and other income of $50.67 billion. Net earnings attributable to CVX totaled $4.49 billion and $2.48 per common share, up 1.2% and 2.1% from the prior year’s quarter, respectively. Also, its free cash flow increased 12% year-over-year to $5.60 billion.

In addition, CVX’s cash and cash equivalents and total assets came in at $4.70 billion and $259.23 billion as of September 30, 2024.

For the fourth quarter ending December 2024, street expects CVX’s revenue to increase marginally year-over-year to $47.22 billion. The company’s EPS for the same quarter is expected to be $2.48. Moreover, CVX surpassed the consensus EPS estimates in three of the trailing four quarters.

CVX’s stock has surged 5.9% over the past month and 10.2% over the past year to close the last trading session at $156.93.

CVX’s bright prospects are reflected in its POWR Ratings. CVX has a B grade for Quality, Momentum, and Stability. CVX is ranked #27 among the 77 stocks in the same industry.

Click here to access CVX’s ratings for Sentiment, Growth, and Value.

What To Do Next?

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XOM shares were trading at $120.92 per share on Monday afternoon, down $0.19 (-0.16%). Year-to-date, XOM has gained 24.05%, versus a 27.17% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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