Stocks to buy

7 Dividend Stocks to Buy That Are Benefiting from the Energy Boom

Although society at large looked forward to a broader normalization cycle, the sudden interest in energy-related dividend stocks to buy signaled that the post-pandemic paradigm still has serious bite. Earlier this month, the Organization of the Petroleum Exporting Countries (OPEC) and non-member oil-producing nations — known as OPEC+ — surprised the world with a shock oil production cut.

As a result, oil prices jumped on the announcement. Further, the action demonstrated that the Federal Reserve doesn’t necessarily represent the only influencer of the dollar’s trajectory. In other words, with the cuts, more dollars will chase after fewer goods, presenting an inflationary framework. Cynically, the artificial demand boost should be positive for the below dividend stocks to buy.

XOM Exxon Mobil $115.23
SHEL Shell $61.38
FANG Diamondback Energy $145.01
CNQ Canadian Natural Resources $59.70
EOG EOG Resources $122.31
COP ConocoPhillips $107.53
SU Suncor Energy $32.60

Dividend Stocks to Buy: Exxon Mobil (XOM)

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A multinational oil and gas stalwart, Exxon Mobil (NYSE:XOM) is one of the biggest dividend stocks to buy that might benefit from the recent energy boom. Since the beginning of the year, XOM gained more than 8%. However, up until March 17, Exxon Mobil stared at some hefty losses. However, the surprise OPEC+ cuts meant that XOM now carries a decisively positive trajectory.

Financially as well, Exxon presents an attractive case for dividend stocks to buy. Along with a solid balance sheet, the company features a three-year revenue growth rate of 15.9% and a net margin of nearly 14%. Both stats rank in the top half of the energy sector.

For passive income, Exxon carries a forward yield of 3.16%. Although not the most generous yield among energy-focused dividend stocks to buy, its payout ratio sits at a low 37.01%. Finally, Wall Street analysts peg XOM as a consensus moderate buy. Their average price target stands at $128.38, implying over 11% upside potential.

Dividend Stocks to Buy: Shell (SHEL)

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A British multinational oil and gas giant, Shell (NYSE:SHEL) initially popped higher in the new year. However, the recent banking sector crisis in the U.S. appeared to rattle SHEL stakeholders. Then came the surprise OPEC+ cuts, which spiked crude oil prices. In turn, sentiment returned to the industry. Since the January opener, SHEL gained almost 9% of equity value.

Financially, the company doesn’t rock the boat too much, presenting decent (but not remarkable) stats. It features okay stability in the balance sheet. Operationally, its three-year revenue growth rate of 9.2% is a bit better than the industry median. However, it does post an attractive net margin of slightly over 11%.

According to data from TipRanks, Shell features a dividend yield of 3.41%. Notably, its payout ratio sits at 19.1%, providing confidence for yield sustainability. Lastly, covering analysts peg SHEL as a consensus moderate buy. Their average price target stands at $69.01, implying almost 14% upside potential. Thus, it’s an enticing opportunity among dividend stocks to buy.

Dividend Stocks to Buy: Diamondback Energy (FANG)

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Headquartered in Midland, Texas, Diamondback Energy (NASDAQ:FANG) focuses on hydrocarbon exploration. Of its proven reserves, about 52% was allocated to petroleum. While FANG popped higher early in the year, banking sector woes contributed to its decline in March. However, when the oil cartel announced its production cuts, FANG resumed its upward trajectory. Since the beginning of 2023, FANG moved up almost 11%.

Financially, Diamondback’s main claim to fame centers on its operational statistics. Up top, its three-year revenue growth rate pings at 31.2%. On the bottom line, its net margin comes in at 45.48%. Both stats rank well into the sector’s top 20%. Additionally, the market prices FANG at a forward multiple of 6.92, ranked better than 61.28% of its peers.

Regarding passive income, Diamondback’s forward yield is only 2.2%. While low, investors should note that its payout ratio sits at 14.62%. That’s a subterranean value, presenting confidence for yield stability. Thus, it’s one of the top dividend stocks to buy. In closing, analysts peg FANG as a consensus strong buy. Their average price target stands at $172.75, implying 19% upside potential.

Canadian Natural Resources (CNQ)

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Based in Calgary, Alberta, Canadian Natural Resources (NYSE:CNQ) is a senior oil and natural gas company. Primarily, Canadian Natural operates in its country’s western provinces. As well, it owns offshore operations in the U.K. sector of the North Sea, along with offshore projects of two African countries. Since the start of the new year, CNQ gained nearly 14% of equity value.

Financially, Canadian Natural benefits from an overall solid profile. First, its balance sheet appears stable based on key metrics. Operationally, its three-year revenue growth rate pings at an impressive 28.2%. Also, it features a net margin of 22%, which beats out 75% of its peers.

For shareholder rewards, the company commands a forward yield of 4.42%, slightly edging out the energy sector’s average yield of 4.24%. Also, Canadian Natural benefits from a sustainable payout ratio of 39.17%, making it an intriguing candidate for dividend stocks to buy. Turning to Wall Street, analysts peg CNQ as a consensus moderate buy. Their average price target stands at $70.95, implying nearly 20% upside potential.

EOG Resources (EOG)

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Headquartered in Houston, Texas, EOG Resources (NYSE:EOG) focuses on hydrocarbon exploration. Unlike the dividend stocks to buy above, EOG carries a more undervalued profile, so to speak. Since the Jan. opener, EOG lost a bit more than 2% of equity value. In the past 365 days, it’s down almost the same magnitude.

That said, in the past 30 days, EOG moved up almost 12%. Financially, the enterprise enjoys enough substance to suggest that the momentum can carry forward. First, it enjoys a strong balance sheet. Second, its revenue growth of 19.9% in the past three years beats out 73.59% of its peers. Also, its net margin is 26.31%, outpacing more than 79% of the competition.

For passive income, EOG carries a forward yield of 2.71%. Let’s face it, that’s not the most remarkable tally. However, EOG’s payout ratio sits at 25.62%, sparking confidence in yield sustainability. Looking to the Street, analysts peg EOG as a consensus strong buy. Their average price target stands at $149.53, implying nearly 23% upside potential.

ConocoPhillips (COP)

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Another enterprise among energy-focused dividend stocks to buy that’s seeing red in 2023, ConocoPhillips (NYSE:COP) will be hoping for brighter days ahead. As a hydrocarbon exploration and production specialist, rising demand for crude oil should offer a cynical boost. For now, since the Jan. opener, COP slipped nearly 6%. Still, in the past month, it gained 6% in market value.

Financially, ConocoPhillips brings another intriguing idea to the table. It features a solid balance sheet, particularly an Altman Z-Score of 4.41 (indicating low bankruptcy risk). As well, it posts an impressive three-year revenue growth rate of 28.4%, outpacing nearly 83% of its peers.

For stakeholder rewards, ConocoPhillips commands a forward yield of 1.91%. To be sure, that’s somewhat disappointing. However, keep in mind that the payout ratio sits at 19.44%. Therefore, you should be able to trust the yield. Moving forward, analysts peg COP as a consensus strong buy. Their average price target is $134.25, implying almost 26% upside potential.

Suncor Energy (SU)

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Also based in Calgary, Alberta, Canada’s Suncor Energy (NYSE:SU) specializes in production of synthetic crude from oil sands. For a more speculative taste of dividend stocks to buy, SU just might fit the bill. Like other energy enterprises, SU shot higher in 2023, only to be undone with the banking sector fallout. However, the OPEC+ cuts put Suncor back in business. Since the Jan. opener, SU gained 7% of equity value.

Financially, Suncor presents a decent profile though I wouldn’t classify it as remarkable. First, the company benefits from decent stability in the balance sheet. Second, it posts a three-year revenue growth rate of 21%, beating out more than 75% of its oil and gas peers. As well, its net margin is 14.39%, above 68% of the competition.

Moving to passive income, Suncor’s forward yield comes out to 4.74%, beating the energy sector’s average yield of 4.24%. Also, the payout ratio lands at 30.76%, a sustainable metric. Finally, covering analysts peg SU as a consensus moderate buy. Their average price target stands at $40.98, implying nearly 27% upside potential.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.