Oil and natural gas prices can fluctuate unpredictably, often with dramatic speed. Current geopolitical tensions further highlight the necessity for energy investors to brace themselves for potential volatility that frequently captures headlines.
If you’re seeking high-yield energy stocks, you might find it advantageous to stick with a dependable giant like Chevron (NYSE: CVX) or consider an investment in a midstream powerhouse such as Enterprise Products Partners (NYSE: EPD). Here are some key insights.
1. Chevron Offers Direct Energy Exposure
For those wanting direct exposure to oil and natural gas, Chevron—with a dividend yield of approximately 4.7%—might be a suitable choice. A $1,000 investment can yield around six or seven shares. Notably, Chevron boasts a solid history of dividend growth, having increased dividends for 38 consecutive years.
Despite the many fluctuations in oil and gas prices, Chevron remains steadfast in its commitment to dividends. Its business model is diversified across various energy sectors and geographical regions, allowing it to navigate energy market fluctuations effectively. By having interests in upstream (production), midstream (pipelines), and downstream (refining), Chevron benefits from varying operational dynamics throughout the energy cycle.
2. Enterprise Products Partners: A Different Approach
If you prefer to invest in dividend-generating energy stocks without direct exposure to oil prices, midstream companies like Enterprise Products Partners might be the answer. These firms own critical infrastructure like pipelines that transport oil, gas, and refined products worldwide.
Midstream companies tend to operate under a different model, primarily earning fees for utilizing these energy assets. Consequently, the volume of products flowing through their infrastructure is more crucial than the prices of those products. Given the constant demand for energy in our lives, Enterprise’s reliable cash flow supports its impressive distribution yield of 6.8%.
Reliable Investments Amidst Energy Volatility
With the current volatility in the energy sector, both Chevron and Enterprise offer appealing investment avenues. They are typically considered stable choices due to their ability to withstand industry fluctuations while rewarding investors with dividends. If you have $1,000 to invest in energy stocks, either of these two would make a strong dividend-focused addition to your portfolio.
Is Chevron a Good Investment Right Now?
Before deciding to invest in Chevron, keep in mind that the Motley Fool Stock Advisor recently highlighted 10 stocks they believe to be excellent investment opportunities, and Chevron was not included. These selected stocks have the potential for substantial returns in the coming years.
Reuben Gregg Brewer does not have positions in any mentioned stocks. The Motley Fool holds positions in and recommends both Chevron and Enterprise Products Partners.
