The energy industry can be pretty volatile. Take crude oil prices this year, for example. West Texas Intermediate, the primary U.S. benchmark price, has been as high as $80 and as low as $55 a barrel this year. That volatility can make it difficult to confidently invest in the energy sector.
However, a few energy stocks stand out to some of our Fool.com contributors this month as those that you shouldn’t hesitate to buy: Enterprise Products Partners (EPD 1.22%), Oneok (OKE 0.63%), and ExxonMobil (XOM 2.42%). Here’s why you can confidently add them to your portfolio this June.
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Enterprise Products Partners won’t excite you and that’s good
Reuben Gregg Brewer (Enterprise Products Partners): When it comes to income investing, boring is usually better. All you want is your dividend check paid on a regular basis. Dividend increases are nice, but smaller reliable increases are probably better than large ones that could put the dividend at risk. And when it comes to the yield, well, higher is better, but only up to a point, since a too-high dividend could end up getting cut. North American midstream giant Enterprise Products Partners passes all of these tests.
For starters, Enterprise has increased its distribution annually for 26 consecutive years. The master limited partnership’s normal increase has recently been in the mid-single digits, which is above inflation but not so fast that the distribution is at any risk. That’s highlighted by the fact that distributable cash flow covered the distribution by a very strong 1.7 times in 2024. Enterprise also happens to have an investment grade-rated balance sheet, providing a strong foundation for the distribution.
That said, the best part is probably the distribution yield. At roughly 6.8%, Enterprise Products Partners’ yield will provide you with much more income than the 3.5% yield of the average energy stock. And while Enterprise’s yield will probably make up the lion’s share of total return over time, it has a $7.6 billion capital investment program in the works that will help it support business and distribution growth in the years ahead.
If you’re looking for a reliable income stock, you shouldn’t hesitate at all before buying Enterprise.
A model of sustainable growth
Matt DiLallo (Oneok): The energy sector is notoriously volatile. Because commodity prices can swing wildly in response to changes in supply and demand, many energy companies struggle to deliver consistent growth and stable dividends.
However, Oneok isn’t your average energy stock. The energy infrastructure company has delivered over a quarter-century of dividend stability and growth. While it hasn’t increased its payment every year, it has nearly doubled its dividend over the past decade, which is much higher than its peers in the pipeline sector.
A big factor fueling Oneok’s stable and rising dividend is its proven ability to grow its earnings throughout the commodity price cycle. It has grown its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for 11 straight years, and at an impressive 16% compound annual rate during that period. That’s rather remarkable considering all the volatility in the sector during that period. Oneok has delivered sustainable growth by investing in value-enhancing organic expansion projects and making highly accretive acquisitions.
Oneok has maintained a rock-solid financial profile even as it has invested heavily to expand its operations and earnings. It has an investment-grade balance sheet backed by a conservative leverage ratio of 3.5.
That gives it the financial flexibility to continue investing in expanding its operations. The company has several organic expansion projects under construction, including its Texas City Logistics Export Terminal joint venture (JV) with MLPX, which should enter commercial service in 2028. Oneok also recently bought out the remaining 49.9% interest in a gathering and processing JV in the Delaware Basin to advance its Permian Basin growth strategy.
The company’s investments will supply it with more income to continue increasing its dividend. It’s targeting to grow that payout, which currently yields more than 5%, by 3% to 4% per year. With a durable business, rock-solid financial profile, and visible growth coming down the pipeline, Oneok is one energy stock you shouldn’t hesitate to buy this month.
A rock-solid oil dividend stock to own
Neha Chamaria (ExxonMobil): Since ExxonMobil is an oil and gas producer, investors in energy are sometimes wary of investing in the stock during uncertain times. On the contrary, ExxonMobil is the kind of oil stock you’d want to buy on dips. That’s because ExxonMobil is a well-capitalized company and one of the top dividend-paying oil stocks, and it has big plans for the future.
ExxonMobil’s cash flows have grown steadily since 2019, after the company launched initiatives to boost production efficiencies and cut costs. In 2024, for instance, ExxonMobil generated $55 billion in cash flow from operations on net earnings of $33.7 billion, driven by record production in the Permian and Guyana basins. ExxonMobil expects the trend to continue, as it’s launching 10 “advantaged” projects this year that are expected to add over $3 billion in earnings in 2026 alone.
Advantaged projects are expected to yield higher than average returns in the long term. By 2030, ExxonMobil believes it can generate $20 billion in incremental earnings and $30 billion in cash flow from these and upcoming projects. That’s huge, and it could mean big returns for shareholders in the years to come since ExxonMobil also remains committed to dividends. The oil giant has increased its dividend for 42 consecutive years now, and its dividend growth has contributed steadily to shareholders’ total returns over the years. ExxonMobil’s focus on cash-flow growth makes it one of the best energy stocks you could buy now and hold. The stock also yields a decent 3.9%.