When it comes to energy investing, many investors approach the sector with an eye on short-term gains based on the latest trends in oil or gas prices. However, not every energy stock has to be a swing trade based on commodity prices.
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There are a number of stocks out there that offer reasonably consistent dividend payments as a way to provide steady income over the long haul. While there are assuredly trends in supply and demand that are worth watching, as well as long-term structural changes that are sure to be brought on by the pressures of climate change, the bottom line is that the energy sector has learned how to evolve and grow no matter what headlines get thrown its way.
If you’re looking for exposure to energy stocks but are looking for dividend plays instead of short-term investments, consider one of the following seven stocks:
| Energy Stock | Total 12-Month Return | Dividend Yield (trailing 12 months) |
| Shell PLC (ticker: SHEL) | 7.6% | 3.6% |
| Enbridge Inc. (ENB) | -10.7% | 7% |
| Coterra Energy Inc. (CTRA) | -11% | 8.3% |
| Oneok Inc. (OKE) | -4.3% | 6.5% |
| Clearway Energy Inc. (CWEN) | -3.7% | 4.8% |
| Consol Energy Inc. (CEIX) | 24.2% | 5.6% |
| Exxon Mobil Corp. (XOM) | 20.7% | 3.4% |
Best Megacap Energy Stock: Shell PLC (SHEL)
Though technically a U.K. not a U.S. stock, multinational oil and natural gas giant Shell PLC is still one of the leading names in the space and subject to the same trends as domestic firms. This integrated energy company has been in operation for more than a century, and at more than $200 billion in market value is one of the five biggest companies in the sector
worldwide.
As of the end of 2022, Shell had nearly 10 billion barrels of oil and equivalents in its reserves. That means it has ample supplies right now to fuel its growth even as it invests in renewable energy sources and carbon-credit assets in the age of climate change.
From a dividend perspective, Shell yields 3.6% at present on a trailing-12-month basis — roughly twice the yield of the entire S&P 500 index — after recently boosting its payouts from 50 cents quarterly to 57 cents. Wall Street likes what it sees as a result, with its American depositary receipts outperforming the broader market over the last 12 months to deliver a total return, which includes dividends, of roughly 8% through May 18.
Best Midstream Energy Stock: Enbridge Inc. (ENB)
Another international player, Canada’s Enbridge is one of the largest “midstream” companies in North America, operating a network of pipeline and storage facilities for oil and gas that makes it an integral part of the global supply chain. What’s more, unlike explorers in the energy sector there isn’t direct exposure to the ups and downs of energy prices — so if oil does take a tumble later in 2023 or 2024, ENB stock is relatively insulated since it’s still moving the fossil fuel around despite the ding to profit margins for refiners and other end users.
Furthermore, in recent years Enbridge has tightened its grip through acquisitions of firms like Spectra Energy and that has only widened its moat. It all adds up to not just a juicy trailing-12-month dividend yield of 7% right now, but 25 years of consecutive annual dividend growth — at least in Canadian dollars, though minor currency changes do show up for U.S. investors.
The $75 billion Enbridge has a wide moat and strong dividend history that makes it worth a look for long-term dividend investors interested in energy exposure.
[READ: 7 Best Oil Stocks to Buy for Exposure to Crude Prices]
Other Energy Dividend Stocks to Buy Now
With dozens of energy stocks paying decent dividends, there’s a wide variety of different ways to play the sector. Investors should always do their own research and trade based on personal risk tolerance, but the following list of stocks offers some alternatives if you’re looking to cash in on oil, gas or other energy investments.
Coterra Energy Inc. (CTRA)
Oil and gas explorer Coterra has a simply amazing payout. In fact, it’s one of the top S&P 500 dividend stocks right now. The firm primarily engages in the exploration and production of oil and natural gas in the Marcellus Shale region of Pennsylvania and the Anadarko Basin in Oklahoma, and shares its profits with investors as it brings that fuel to market. Just keep in mind that future prices could weigh on distributions. For instance, its latest dividend of 20 cents per share is down significantly from 57 cents in March. But with a trailing-12-month yield of 8.3%, the highest on this list, those dividends can slump slightly and you’ll still have a very generous holding.
Oneok Inc. (OKE)
Already one of the top 10 midstream energy stocks out there, OKE made waves recently by agreeing to buy competitor Magellan Midstream Partners LP (MMP) in a massive deal valued at almost $19 billion. If the transaction goes through, OKE will be among the biggest oil and natural gas pipeline operators in the world. That won’t just give it stability through scale as a crucial part of the energy supply chain, it will also fuel continued dividends for an already generous company that currently yields 6.5%.
Clearway Energy Inc. (CWEN)
A renewable energy company, Clearway operates about 5,500 net megawatts of installed wind and solar generation projects. That’s enough to power roughly 1 million homes, give or take. Technically a utility stock because of this electricity distribution as well as production, Clearway has a reliable payout of about 4.8% at present and has paid distributions since soon after its incorporation back in 2012.
Consol Energy Inc. (CEIX)
The flip side of alternative energy, Consol produces and exports coal that it mainly mines out of the Appalachian and Illinois basins. After a spinout and relisting in 2017 as a coal-focused company separate from the natural gas assets of its parent, the firm has simply been on a tear. Specifically, shares are up more than 800% from this time three years ago on a total-return basis. Dividends came online only in 2022, but since then the company has paid a steady dividend that has already increased twice. And with a trailing yield of 5.6%, it’s a generous distribution at that.
Exxon Mobil Corp. (XOM)
You simply can’t finish a list of energy dividend stocks without Exxon. The company is among the largest and most established in the world, but beyond that it also has an enviable history of 40 consecutive years of dividend increases. That spans the current energy market volatility, the financial crisis, the dot-com crash and a host of other disruptions. The yield is a rather modest 3.4% at present, but long-term investors may still want to take a look based on the future potential and reliability here.
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7 Best Energy Dividend Stocks to Buy Now originally appeared on usnews.com
Update 05/19/23: This story was previously published at an earlier date and has been updated with new information.
