Every investor should consider including energy stocks in a diversified portfolio. Energy, whether oil and gas or renewables, is the bedrock of the economy, and that's not likely to ever change.
Today, oil prices, which can impact stock prices in the industry, are near their 52-week lows. It's counterintuitive, but buying energy stocks when commodity prices are low can pay off when those prices rebound, and energy stocks follow.
These three blue chip energy stocks are near their lows today. For just $500, you can add all three to your portfolio and feel confident holding them indefinitely.
1. Chevron
Integrated oil major Chevron (CVX 0.08%) participates in almost all aspects of fossil fuel production, from exploring and drilling for oil and gas to refining and selling it. Oil and gas are cyclical businesses, which means that companies must manage their finances well to endure the occasional downturns. Chevron certainly has the size to weather the ups and downs; it's one of the world's largest energy companies.
The company has paid and raised its dividend for 36 consecutive years, meaning it managed to grow its payout through the pandemic and multiple recessions spanning almost four decades. Investors should read that as battle-tested. Today, Chevron's debt-to-equity ratio is just 0.12, near its historical low, so it would be able to lean on its balance sheet if the industry suffered another downturn.
NYSE: CVX
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Importantly, Chevron has planted seeds for growth over the coming decade. It went on an acquisition spree, spending roughly $70 billion over the past year to grow larger. Now, Chevron is poised to enjoy access to high-upside assets offshore in Guyana and in the Permian Basin. Chevron's strong balance sheet, new growth opportunities, and growing dividend (yielding 4%) make it an all-in-one package for any long-term investor.
2. ExxonMobil
Chevron's arch-rival, ExxonMobil (XOM +1.86%), is similar in many ways -- the two companies are to U.S. energy what Ford and General Motors are to American automotive. The does-it-all oil and gas major ExxonMobil has earned its industry stripes by paying and raising its dividend for 41 consecutive years. While its debt-to-equity ratio is 0.2, a bit higher than Chevron's, ExxonMobil boasts a massive $33 billion of cash on its balance sheet, leaving only $8 billion in net debt.
Size is a competitive advantage in the energy business, and ExxonMobil has also used it to swallow up peers and smaller competitors. The company has a pending $59.5 billion all-stock acquisition of Pioneer Natural Resources, which will more than double its footprint in the Permian Basin. ExxonMobil also has assets in the Guyana region, where it has made several notable discoveries. In all, ExxonMobil is poised for strong long-term production.
NYSE: XOM
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ExxonMobil is an oil and gas company first, but it's also remained open to new markets. It's investing in carbon capture technology and lithium mining, which is projected to begin yielding results in 2027. ExxonMobil's low net debt and huge size give it financial flexibility that is somewhat unique in this capital-intensive industry. Consider ExxonMobil (as well as Chevron) stocks to dollar-cost average into and hold for the long haul.
3. NextEra Energy
Renewable energy has made a lot of progress over the past decade, now accounting for roughly 20% of all electricity used in the U.S. NextEra Energy (NEE +1.21%) is America's largest renewable energy producer. It also doubles as an electric utility in the Southeastern U.S. The tailwind of growing renewables has been good for NextEra's business -- shares have outperformed the S&P 500 over the last 10 years.
It's also a solid dividend stock, and its current 3% yield comes with consistent growth. NextEra has raised the payout for 29 consecutive years and counting. The stock became a bit turbulent in 2023 due to rising interest rates making borrowing more expensive. The company has leaned on borrowing to help fund growth, but it still has an investment-grade credit rating.
NYSE: NEE
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Additionally, long-term trends favor NextEra Energy. America as a whole is striving to reduce carbon emissions. Studies have estimated a $4 trillion investment opportunity now through 2050 that will demand 7,000 gigawatts (GW). Today, NextEra's production and storage capacity is only 70 GW, and there is 21 GW more in its backlog. Investors can buy the stock with confidence that the utility business is highly regulated and stable (people always need electricity), and the renewable business will continue to present long-term upside.
