Major oil and gas stocks with high dividend yields offer investors the opportunity for steady cash flow. Here’s a look at the five top US oil and gas dividend stocks.
Major oil and gas stocks have historically offered investors high dividend yields.
In 2021, oil and gas stocks are trying to recover from the pressure placed on demand by COVID-19 lockdowns. However, this segment of the stock market is still flush with dividend yields of over 5 percent.
A dividend is a portion of a company’s profits that is paid out on a regular basis, typically quarterly, to shareholders. “The dividend yield is a financial ratio that represents the dividend income per share, divided by the price per share,” according to Investopedia. “It is considered a sign of clear financial health and confidence for a company to pay out dividends.”
For those who prefer a long-term approach to investing, stocks with high dividends allow for a steady flow of income and the opportunity for investors to increase equity holdings.
The Investing News Network has compiled a list of the five top US oil and gas dividend stocks using TradingView’s stock screener. The energy sector companies on this list have strong dividends yields of greater than 5 percent, as well as debt-to-equity ratios (total equity divided by total liabilities) of less than 0.5. This ratio shows how much company financing is generated from debt rather than equity.
1. Dorchester Minerals (NASDAQ:DMLP)
Market cap: US$501.12 million; dividend yield: 8.8 percent; debt-to-equity ratio: 0.03
Dorchester Minerals’ high-yield dividend and low debt-to-equity ratio is highly attractive to long-term investors, including Warren Buffet, the Oracle of Omaha.
The company engages in the acquisition, ownership and administration of producing and non-producing natural gas and crude oil royalty, net profit and leasehold interests in the US.
2. Black Stone Minerals (NYSE:BSM)
Market cap:US$1.85 billion; dividend yield: 7.84 percent; debt-to-equity ratio: 0.114
Founded in 1876, Black Stone Minerals has exploration operations in several prime US oil and natural gas districts, including the Louisiana-Mississippi Salt Basins, the Western Gulf, the Permian Basin, the Palo Duro Basin, the East Texas Basin, the Anadarko Basin, the Appalachian Basin, the Arkoma Basin, Bend Arch-Fort Worth and Southwestern Wyoming.
This diversification, coupled with a high dividend yield and a low debt-to-equity ratio, has attracted investment from hedge funds such as Crescent Capital Consulting and Annandale Capital.
3. ExxonMobil (NYSE:XOM)
Market cap: US$230.17 billion; dividend yield: 6.4 percent; debt-to-equity ratio: 0.464
One of the biggest names in the energy business, ExxonMobile’s corporate segments include upstream exploration and production of oil and natural gas; downstream manufacturing operations and sales of petroleum products; and operations involved in the manufacturing and sales of petrochemicals. The multinational company has exploration and development activities in the US, Canada, South America, Europe, Africa, Asia and Australia/Oceania.
ExxonMobil still has a high dividend yield despite recently reporting its first annual loss in four decades. The company has defended its dividend as still sustainable at current oil prices.
4. CNOOC (NYSE:CEO,TSX:CNU)
Market cap: US$53.01 billion; dividend yield: 6.31 percent; debt-to-equity ratio: 0.334
CNOOC is China’s largest producer of offshore crude oil and natural gas. One of the largest independent oil and gas exploration and production companies in the world, CNOOC’s core operations are in Bohai, the Western South China Sea, the Eastern South China Sea and the East China Sea in offshore China. The company also has oil and gas assets in Asia, Africa, North America, South America, Oceania and Europe.
5. Chevron (NYSE:CVX)
Market cap: US$192.63 billion; dividend yield: 5.16 percent; debt-to-equity ratio: 0.366
Another heavy hitting energy stock, Chevron’s operations span every facet of the value chain, from “upstream exploration and production to midstream transportation, power and trading to downstream manufacturing and retail.”
Also a dividend aristocrat like ExxonMobil, Chevron has been a leader in payouts to dividend investors for nearly 30 years. Analysts remain convinced that despite losses in 2020, the company’s strong balance sheet makes its high-yield dividend sustainable.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.