If you hadn't noticed, the world is starting to get more and more serious about clean energy. That's potentially bad news for energy stocks, but don't count the sector out. In fact, there are different ways to play the energy transition if you take the time to dig in just a little. And depending on your stance on the industry, Chevron (CVX -1.85%), Royal Dutch Shell (RDS.B), and TotalEnergies (TTE -2.03%) are all potential top energy stocks to look at right now. Here's why.

Someone's gotta do it

Chevron isn't ignoring the shift toward renewable power (and away from the carbon-based fuels it specializes in), but it is basically choosing to stick with what it knows best. In fact, during the industry downturn in 2020, it bought Noble Energy, using the opportunistic acquisition to bulk up its energy business. That may not sound like the smartest thing to do when the world is looking toward a cleaner future, but the truth is that the shift away from oil and natural gas isn't like turning off a light switch. 

A person with offshore oil rigs in the background.

Image source: Getty Images.

It will likely take decades for the world to change gears -- and in the meantime, someone is going to have to keep looking for and pumping oil. And Chevron has one of the strongest balance sheets in its integrated energy peer group, even after the Noble acquisition. Meanwhile, Chevron's dividend yield is a generous 5.2%, backed by more than three decades worth of annual dividend increases. If you think oil still has some legs left, despite the broader industry trends, then Chevron is probably a good energy stock for you.

Looking to change, fast

Royal Dutch Shell is at the other end of the spectrum. In 2020 it cut its dividend by a huge 66%. At about the same time it announced that it was going to overhaul its business, with an aggressive move toward clean energy. And the company recently lost a court case in Europe that may result in it having to move even faster than it had originally planned. Although Shell intends to appeal this decision, it has already said it will look at ways to speed up its transition.

That said, Shell has increased its dividend two times since the dividend cut. Basically, management is signaling that it wants to get through this transition while rewarding investors with a growing dividend. To be fair, Shell's 3.7% yield is at the low end of the integrated energy major peer group, so investors looking to maximize the income their portfolios generate probably won't be interested. However, dividend growth investors might just find it an appealing way to play the energy industry's shift toward clean energy while generating a still-notable income stream (the S&P 500 Index, for reference, only yields around 1.3% today). 

CVX Dividend Per Share (Quarterly) Chart

CVX Dividend Per Share (Quarterly) data by YCharts

The punter

The last name up is French energy giant TotalEnergies, which used to be known as just Total. The name change was made to recognize that the company is, like Shell, looking to shift toward clean energy. However, there are a couple of big differences in the approach being taken here. The most notable is that TotalEnergies intends to hold the line on its dividend, recognizing that dividends are important to its shareholders. The yield is currently a hefty 6.9%. But it is unlikely that the dividend will see an increase anytime soon, so this is a name for investors looking to maximize yield, but not a great choice for dividend growth.

It's also notable that TotalEnergies isn't actually looking to drastically shrink its carbon-based fuels business. The goal is to shrink the oil footprint by focusing on the best assets in the portfolio, grow in natural gas (seen as a transition fuel), and aggressively grow the company's "electrons" operations. The end result will be a bigger carbon business and a bigger "electrons" business, leading to a bigger TotalEnergies. Essentially, TotalEnergies is looking to use its oil and natural gas operation as the foundation on which it builds its clean-energy future. If that sounds like a good middle-of-the-road plan, then this might be the right energy stock for you.

No easy choices

The energy industry is changing, but there's no clear path for what a company or investors should do to participate in the shift. Chevron believes it can continue to supply the world with vital carbon fuels for years to come, and keep rewarding investors with dividend growth along the way. Shell basically hit the reset button, but believes it is on a more sustainable path, figuratively and literally. And TotalEnergies is splitting the difference, offering a fat yield and a more nuanced shift toward clean energy. These are three of the top ways to play the energy sector today, with one of the approaches likely to fit with your outlook for the sector.