Jeff Reeves writes about investments, the stock market, exchange-traded funds and retirement topics. A veteran journalist with extensive capital markets experience, Jeff has covered Wall Street and investing since 2008. Beyond Forbes Advisor, his work has appeared in numerous respected finance outlets including CNBC, Fox Business, The Wall Street Journal digital network, Kiplinger, USA Today and CNN Money. All investing carries risk, but a little bit of research can mitigate those risks and ensure you’re in an investment you believe in.
At year-end 2020, reserves stood at 12.3 billion barrels of oil equivalent, 43% of which are liquids. The company operates refineries with capacity of nearly 2.0 million best oil stock barrels a day, primarily in Europe, distributes refined products in 65 countries, and manufactures commodity and specialty chemicals. You’re probably wondering—aren’t we shifting to renewable energy? Because our global infrastructure—from shipping to aviation to industrial production—is still heavily tied to oil. According to market data, oil demand is set to increase slightly by 2025, despite advancements in other energy forms.
How to invest in oil stocks
It also has investments in midstream operations and in petrochemicals via its CPChem joint venture with Chevron (CVX -2.24%). Its marketing and specialties business distributes refined products and manufactures specialty products such as lubricants. Given the uncertainty surrounding future oil demand, ConocoPhillips plans to return a significant portion of its free cash flow to investors in the coming years. It plans to pay a steadily growing dividend, repurchase shares, and pay a variable return of cash based on its excess cash.
Civitas Resources (NYSE:CIVI)
Profits and losses can swing wildly based on small shifts in demand or moves by petrostates such as Saudi Arabia and Russia, whose interests can run counter to those of the public companies in the industry. Supply and demand imbalances can cause huge fluctuations in oil prices. We saw that in early 2022, after Russia’s invasion of Ukraine, which sent crude prices soaring into the triple digits for the first time in years. Like Diamondback Energy, Coterra stands above its peers thanks to its strong operations and consistency, despite volatile energy prices in recent years. Proof of this is that management has been consistent in returning capital to shareholders, with fixed and consistent payouts underpinning its variable dividend, which rises and falls based on commodity price trends. Diamondback is one of the best-performing independent oil and gas companies on Wall Street.
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We used the following criteria to build this list of the best oil stocks. Aside from its attractive financials, Equinor is also noteworthy for its planned evolution beyond oil and gas in the long term. Specifically, the company is planning to move from allocating just 4% of its budget toward renewable energy sources in 2020 to 30% by 2025 and 50% by 2030. Oil stocks as a group have been market laggards since the S&P 500 bottomed out late last year. If there’s any solace to be found, it’s that analysts say rising demand and lower inventories should help the top-rated oil stocks outperform in the second half of 2024 and beyond.
Both offer rather anemic dividend yields of less than 2.3%, and that is not the kind of income potential many investors look for. Furthermore, Marathon and Targa have elevated valuation metrics in comparison to their peers. That’s a warning that potential future financial gains may already be priced into the stocks.So, finding good opportunities in the oil patch is challenging. Each has a strong foundation based on tangible financial metrics, as well as the ability to weather any short-term challenges.
Diversified Energy Co (NYSE:DEC)
- Finally, the company complements its low-cost portfolio with a top-tier balance sheet.
- Even in a perfect work, this sector can be quite volatile as supply and demand are constantly shifting.
- The world’s largest oil-exporting nations include members of OPEC (Organization of the Petroleum Exporting Countries), a cartel that works to coordinate members’ oil policies.
- The top oil stocks in 2025 include ExxonMobil, Chevron, Shell, ConocoPhillips, BP, EOG Resources, Marathon Petroleum, Occidental Petroleum, and Pioneer Natural Resources.
The price of crude oil won’t stay low or high forever, but you can be sure that the price of a barrel is trending up over the long term. Nation worldwide don’t want to cut into their emergency reserves, and you cannot expect a massive dividend yield all the time when the market fluctuates as it does. Oil is a finicky industry – be sure to do your homework before investing in a sector facing unprecedented uncertainty. EOG Resources is an oil and gas producer with acreage in several U.S. shale plays, including the Permian Basin, the Eagle Ford, and the Bakken.
Suncor Energy (SU)
- They run the gamut from pure-play exploration and production companies (E&Ps), midstream businesses, service providers, and refiners to integrated oil majors that do a little bit of everything.
- He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor’s Business Daily, among many other outlets.
- Independent oil and gas company Coterra Energy produces oil and natural gas primarily in the Marcellus Shale area around Pennsylvania and the Anadarko Basin of Oklahoma.
- NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
While different segments of the industry come with their own set of risks, factors such as economic growth, geopolitics, and capital allocation can impact the industry as a whole. Admittedly, the company’s profits wax and wane based on the price it commands for fuels it extracts from oil and gas fields. However, investors should be encouraged that in addition to strong financials right now there are also impressive forecasts for FANG in 2024, including nice revenue and earnings growth. Suncor Energy operates in the oil sands of Canada as well as on offshore rigs in the Atlantic Ocean. This specialized business involves more technical expertise, more risk and fundamentally more up-front costs than land-based extraction. However, energy volatility over the last few years has forced companies like Suncor to figure out how to stay lean and profitable even when oil prices roll back.
The company operates in the business segment of international oil and gas exploration, and geographically, it operates in Kenya and Ethiopia. Beyond their growth potential, all these oil and gas stocks offer dividends with annual yields ranging between 3% and 12.7%. The current HF Sinclair is a diversified energy company that refines and sells products such as gasoline, jet fuel, renewable diesel, specialty petrochemicals and more. Like Valero, the refinery operations of DINO allow it to insulate itself from as much volatility as we’ve seen in firms that depend on the current market price of fossil fuels.
Efficient operations, smart acquisitions, and strict cost control allow them to return big chunks of profit to shareholders via dividends and share buybacks. If you’re looking for stability, attractive dividends (currently yielding over 3%), and a bullish long-term forecast, ExxonMobil offers a nicely balanced package. It’s like that one reliable friend who always shows up—and with profits to share.
BP provides nearly three times the dividend yield of the S&P 500 index, as measured by popular S&P 500 Index tracking fund Vanguard 500 Index (VFIAX). And BP has a rock-bottom price-to-earnings ratio, which makes it a real bargain right now. He’s also written for Esquire magazine’s Dubious Achievements Awards. A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor’s Business Daily, among many other outlets.
ExxonMobil has weathered many storms and still stands as one of the world’s most powerful oil companies. In 2025, it’s set to remain a top pick thanks to smart capital discipline and a renewed focus on shareholder value. With increasing upstream production and downstream efficiency, XOM is poised to generate robust free cash flow. Phillips 66 also boasts a strong financial profile, which includes an investment-grade balance sheet with very manageable debt. Its low debt and high cash reserves mean it has ample capital to invest in expansion projects, including renewable fuels. Phillips 66 is one of the leading oil refining companies, with operations in the U.S. and Europe.
Timing is everything, and 2025 might just be your golden hour as companies ramp up production and cash in on higher profit margins. They run the gamut from pure-play exploration and production companies (E&Ps), midstream businesses, service providers, and refiners to integrated oil majors that do a little bit of everything. Despite any problems that might arise, remember that the oil market tends to be a safe place to hold assets for long periods of time. There is quite a lot of growth potential in this sector, and you should keep your eye on the oil industry even as renewable energy becomes a powerful force worldwide. Oil has made headlines during this coronavirus crisis, although not for reasons investors want to see. In addition to issues caused by international events, especially those that impede the safe transport of natural resources.
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They can collect a steady base dividend that’s sustainable throughout the oil price cycle and have the potential to earn significant payments during periods of high prices. Prices keep fluctuate often and there’s pressure on the industry from both short-term and long-term headwinds. If you’re investing in energy for income, it’s very attractive to find an explorer, such as Coterra, that offers a consistent payout but still has the potential for big distributions when times are good.
At the end of 2020, it reported net proved reserves of 3.2 billion barrels of oil equivalent. Net production averaged 754 thousand barrels of oil equivalent per day in 2020 at a ratio of 72% oil and natural gas liquids and 28% natural gas. Some are giants that pump barrels by the millions; others are nimble shale producers. What you need to look for are winners—companies that manage costs well, generate healthy cash flow, and consistently reward shareholders. Thanks to its large-scale, vertically integrated operations, Phillips 66 is among the lowest-cost refiners in the industry. It has diversified operations across several low-cost, oil-rich basins.
Top stories, top movers, and trade ideas delivered to your inbox every weekday before and after the market closes. Notably, the stock with the highest upside in InvestingPro’s valuation also ranks as the top pick among analysts. To learn more about our rating and review methodology and editorial process, check out our guide on how Forbes Advisor rates investing products. It’s also worth noting that the dividend has consistently moved higher despite recent challenges in the sector. This long-term evolution is a necessity in the age of climate change, and it will ensure Equinor remains a significant energy producer while also reducing its net group-wide carbon emissions. Not to mention, it aims to achieve those goals while still producing reliable and affordable energy.