For investors prospecting the market for oil dividend stocks, deciding among the dozens of energy stocks that are also dividend stocks can be daunting. Making a sound choice can help investors sit back and enjoy watching portfolios become energized with a stream of passive income.
Although oil stocks have often been a profitable choice for investors, increasing calls for the adoption of renewable energy may suggest that oil companies -- and oil stocks -- will soon be in decline. A more likely scenario is that companies involved in oil production will continue to play a significant role, especially since petroleum is found in a variety of agricultural, pharmaceutical, and cosmetic products.
In the near term, the market is expected to continue growing. The International Energy Agency (IEA), for example, projects global oil demand will increase by 2.5 million barrels per day between 2024 and 2030, when it will reach about 105.5 million barrels per day.
Here are the top dividend oil stocks
There are many options available to investors, but there's no need to burn the midnight oil looking for the most compelling choices. Let's take a look at five of the best.
1. Chevron
Chevron is one of the largest oil companies in the world. The reach of its integrated operations extends into multiple aspects of the oil industry.
NYSE: CVX
Key Data Points
Chevron forecasts production increasing at a compound annual growth rate (CAGR) of about 6% from 2024 through 2026, assuming that the price of oil benchmark Brent crude averages $70 per barrel. This, in turn, should contribute to growing free cash flow (FCF). From Permian assets alone, management projects FCF growth of about $2 billion by 2026.
Management believes that the production growth will contribute to greater profitability. Although Chevron reported a 7.5% adjusted return on capital employed (ROCE) in the second quarter of 2025, management is targeting an ROCE that tops 12% by 2027 if the price of Brent crude averages $60 per barrel. Similarly, with the same price sensitivity, Chevron projects greater free cash flow.
Traded on the New York Stock Exchange for more than a century, Chevron is now the only energy stock in the Dow Jones Industrial Average. For 38 consecutive years, Chevron has increased its dividend, and its dividend growth may very well continue to rise in the near future. Management has said it expects to increase its distribution to shareholders over the next five years if the price of Brent crude averages more than $50 per barrel.
2. EOG Resources
Founded in 1985, EOG Resources has developed into one of the largest publicly traded exploration and production (E&P) companies based on market capitalization. Although the company has assets in Australia and the Caribbean, EOG's properties in the U.S. -- in the Rocky Mountains, Permian Basin, and South Texas -- are predominantly responsible for the company's oil production.
Presumably, its many untapped resources will be a source of continuing production. As of the end of 2024, the company reported it had total estimated net proved reserves of 4.75 billion barrels of oil equivalent, suggesting that EOG has plenty of opportunities to extract oil from the ground.
One of the most appealing aspects of EOG Resources is its robust financial position. E&P companies often carry significant debt on their balance sheets, yet EOG Resources ended the third quarter of 2025 with $5.5 billion in total liquidity.
To ensure its financial health, the company has targeted a total debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio below 1.0 in the case that there's a downturn in energy prices and oil benchmark West Texas Intermediate drops to $45 per barrel.
Proving adept at managing its capital, EOG has also demonstrated a commitment to returning cash to shareholders. Should the company achieve its forecast of paying $3.95 per share in dividends for 2025, it will mean that EOG will have raised its dividend at a 14.5% CAGR since 2000.
Given its track record of rewarding investors and generating strong free cash flow that has averaged 22.5% of revenue over the past three years, EOG Resources is an oil dividend stock worth digging into.
3. ExxonMobil
Operating conventional oil and gas assets in almost 20 countries around the world, ExxonMobil reported 2024 net production of 4.3 million oil-equivalent barrels daily, and it projects total upstream production will grow to 5.5 million oil-equivalent barrels per day by 2030. But there's much more than conventional assets to the company's upstream business.
NYSE: XOM
Key Data Points
ExxonMobil also operates unconventional, deepwater, heavy oil, and liquefied natural gas (LNG) assets -- a business that grew considerably larger after its acquisition of Pioneer Natural Resources in May 2024. With the acquisition complete, management expects Permian production to grow from 1.2 million barrels of oil equivalent per day in 2024 to about 2.5 million barrels of oil equivalent per day by 2030.
It has upwardly revised its expectations regarding synergies. In a December 2025 update, management stated that it now expects annual synergies from the acquisition to total $4 billion.
Like Chevron, ExxonMobil has demonstrated a long commitment -- 43 consecutive years -- to increasing the capital it returns to shareholders by way of a dividend. ExxonMobil is pursuing share buybacks as a way to grow shareholder value. In addition to the $16.7 billion in dividends that the company paid on its common stock, ExxonMobil also repurchased more than $19 billion in stock during 2024.
ExxonMobil continued its work to strengthen its balance sheet, ending the third quarter of 2025 with a debt-to-capital ratio of 13.5%. That's significantly lower than the 21.4% ratio at the end of 2021 and the 29.2% figure at the end of 2020. With a more robust balance sheet, the company is in a secure position to continue its streak of raising its dividend.
4. Kinder Morgan
As the largest energy infrastructure company in the S&P 500, Kinder Morgan is one of the more recognizable names among midstream companies. The self-proclaimed "largest independent transporter of petroleum products in North America" estimates that it transports 2.4 million barrels of gasoline, jet fuel, diesel, natural gas liquids, and condensate daily through an expansive 9,500-mile network located throughout North America.
NYSE: KMI
Key Data Points
In addition, Kinder Morgan operates 65 liquids terminals that store fuels and offer blending services for ethanol and biofuels. There's ample room for growth as well. Kinder Morgan's project backlog totaled $9.3 billion at the end of third-quarter 2025.
When you survey the energy landscape for interesting oil dividend stocks, it's not uncommon to find companies risking their financial well-being to satisfy shareholders with lofty dividends. But that's hardly the case with Kinder Morgan.
Over the past seven years, the company has self-funded its capital expenditures and dividends. To put the security of the dividend in perspective, consider that Kinder Morgan has generated an average of $1.1 billion in free cash flow after dividends were paid annually over the past five years.
5. Phillips 66
Although Phillips 66 isn't involved with exploration and production, the company has a notable presence in various other aspects of the oil industry. The company's midstream business consists of 72,000 miles of pipeline located in the U.S. The company also operates 11 refineries, which have a daily crude throughput capacity of 1.8 million barrels in the U.S. and Europe.
NYSE: PSX
Key Data Points
Phillips 66 refines crude oil, as well as other feedstocks, into gasoline, distillates, and aviation fuels. Rounding out the company's downstream business, Phillips 66 markets gasoline, diesel, and aviation fuel through about 7,200 independently owned outlets in 48 states and Puerto Rico, plus 1,300 company- and dealer-owned outlets in Europe.
Phillips 66 was spun off from ConocoPhillips (COP -0.52%) into its own publicly traded company in 2012. Should the company succeed in meeting its dividend target of $4.75 per share for 2025, it will mean the company will have raised its payout at a 15% CAGR since it started paying dividends in 2012.
Management seems likely to continue returning capital to shareholders by way of dividends in addition to share buybacks. On the company's second-quarter 2025 conference call, CEO Mark Lashier affirmed that "returning over 50% of net operating cash flow to shareholders through share repurchases and a secure, competitive, and growing dividend" is one of the company's top priorities.
Advantages and risks of investing in oil dividend stocks
While identifying the desire to invest in oil stocks that pay dividends is a good first step, it's important that potential investors ensure that the advantages and perils of investing in oil dividend stocks align with their individual goals. Here are some of the potential benefits of an investment in oil dividend stocks:
- Many energy companies have long histories of paying dividends -- even during times of slumping energy prices.
- Portfolio diversification.
- The energy is cyclical, and during times of rising oil prices, energy companies may boost their payouts higher.
Of course, risks are also present with oil dividend stocks, so investors must acknowledge the following before clicking the buy buttons:
- Sustained downturns in energy prices may motivate companies to conserve capital and maintain financial well-being, leading them to slash or eliminate dividends.
- Many energy companies are diversifying their operations and developing low-carbon businesses, which may result in the companies favoring growth projects over dividends.
- Energy companies may suffer from oil spills or other environmental disasters that result in litigation or other financial penalties, prompting them to slash dividends.
What to consider before investing in oil dividend stocks
Before choosing to fuel your portfolio with passive income from oil dividend stocks, there are some important considerations. Looking at the dividend histories of the potential stock purchases is a savvy first step. Investors may find that the stocks in question have a history of boosting the payout and subsequently reducing it.
Another pressing concern is whether companies are jeopardizing their financial health to placate shareholders. There are different ways to determine this, but one place to start is with the payout ratio. If companies consistently return dividends in excess of their profits -- resulting in payout ratios exceeding 100% -- it's a red flag.
How to invest in oil dividend stocks
Once investors decide to hit the gas and proceed with an oil dividend stock investment, there are only a few simple steps they need to take.
- Open your brokerage app: Log in to your brokerage account, where you manage your investments.
- Search for the stock: Enter the stock ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select the order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
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The bottom line
There's no secret formula to identifying the best oil dividend stocks. Still, there are certainly some things that should be on prospective investors' radars, including the company's balance sheet, its ability to generate cash, and its performance history.
A company may sport a high dividend yield, but if it's not in good financial health, that alluring dividend may not be around for long. With the above-mentioned companies, investors hunting for oil dividends to power their portfolios don't need to worry much.
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