You can read more about our editorial guidelines and the investing methodology for the ratings below. But slower economic growth, a softening jobs market and the cumulative effect of years of above-average inflation have also been a weight on the sector. Happily, concerns about the state of consumer spending appear to have been overblown. Their scale and logistics infrastructure give them a huge advantage in this low-cost, high-return region, and 2025 will likely continue that dominance. They aggressively manage their well portfolio and have been early adopters of data and tech in drilling decisions. This makes them incredibly agile and able to scale quickly without blowing up costs.
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They also supply the core ingredients of petrochemicals used to make products such as plastics, rubber, and fertilizer. WTI crude prices held steady on Monday, but a series of positive developments has lifted hopes for a rebound in oil. Please note that the stocks above were selected by an experienced financial analyst, but they may not be right for your portfolio. Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance.
- With average costs of about $40 per barrel and many of its resources even cheaper, it can make money in almost any oil market environment, enabling the company to generate lots of cash flow.
- It operates in every segment of the oil and gas industry, including E&P, midstream, petrochemical manufacturing, refining, and, even further downstream, marketing refined and petroleum products to customers.
- By adjusting supply, OPEC can cause significant fluctuations in the price of oil.
- The company’s diversification enables it to produce lots of low-cost oil and natural gas, which allows it to generate plenty of cash.
- 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.
How to Find the Best Oil Stocks to Buy
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 best oil stock 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.
Dan Schmidt is a finance writer passionate about helping readers understand how assets and markets work. His work has been published by Vanguard, Capital One, PenFed Credit Union, MarketBeat, and Fora Financial. Dan lives in Bucks County, PA with his wife and enjoys summers at Citizens Bank Park cheering on the Phillies. You can diversify your portfolio with oil stocks and even diversify amongst other oil stocks to protect yourself that much more. Valero refines and markets fuels and petrochemical products worldwide. And Canada, that collectively adds up to 3.2 million barrels per day.
Suncor Energy (SU)
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.
Top 9 Oil and Gas Stocks to Watch in 2025 for Smart Energy Investing
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.
BP plc (BP)
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.
- In addition to issues caused by international events, especially those that impede the safe transport of natural resources.
- Chevron’s dividend track record is remarkable; they’ve increased payouts for 36 consecutive years.
- Chevron might seem like the “safe choice” in the oil sector—and that’s exactly what makes it valuable.
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.
Pioneer Natural Resources (PXD)
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.
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.
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.
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.
Before investing in any oil stocks, you need to find the right brokerage account for your investments, even if you have your finger on the pulse of crude oil prices. Most major online discount brokers have access to the oil company shares you’re looking for (along with other firms in the energy sector), but beware of fees and commissions. Almost all brokers are commission-free for stocks and ETFs now, and most require no minimums to open an account.