Donald Trump is a polarizing political figure, and he has come into office with a long list of plans. While not every president is as polarizing as Trump, every single president comes into office with plans. That's the key investment issue to think about, whether or not the current energy plan -- Trump's energy plan -- succeeds in its goals or fails. If you're looking to own an energy stock for more than the next four years, you'll probably want to consider these three energy giants.
1. ExxonMobil's dividend has weathered 10 presidential terms
ExxonMobil (XOM +0.34%) has increased its dividend annually for 42 consecutive years. That's just over 10 four-year periods spanning seven presidents, which means ExxonMobil's dividend has been robust through the energy plans of Democrats and Republicans alike. That's not to suggest that the various energy plans haven't mattered or that they don't have an effect on the company's performance -- only that Exxon is built to survive whatever gets thrown at it. That's exactly what a long-term dividend investor should be looking for in an energy stock.
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The company's strength starts with its business model, which is of the integrated variety. That basically means that it operates in the upstream (energy production), the midstream (energy transportation), and the downstream (chemicals and refining).
Each segment of the broader energy industry operates a little differently. The midstream tends to produce reliable cash flows through the entire energy cycle. The upstream does well when energy prices are high. And the downstream often does well when energy prices are low, given that oil and natural gas are key inputs. This diversification helps soften the peaks and valleys of the volatile energy sector, no matter who is president at any given time.
ExxonMobil also has a very strong balance sheet. The value of this can't be overstated, as it allows management to take on debt during weak patches so that it can keep funding its business and shareholder dividends. When energy prices rise again, as they always have historically, ExxonMobil reduces its leverage in preparation for the next industry downturn. The company's built to survive, and the changing of the guard in Washington isn't going to change much about how ExxonMobil operates over the long term.
NYSE: XOM
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2. Chevron is like ExxonMobil, but with a higher yield
The integrated model that underpins ExxonMobil's business is the same model that Chevron (CVX +0.05%) uses. In some ways, they are interchangeable. ExxonMobil is a much larger company, with a market cap of around $486 billion versus Chevron's $276 billion at recent prices. While both are gigantic companies, if you prefer to stick to the largest companies in an industry, ExxonMobil wins. Another key difference is that Chevron has "only" increased its dividend annually for 37 consecutive years. That's roughly one less presidential term, which really isn't that big a deal. The two really stand toe to toe on the dividend reliability front.
However, when it comes to dividend yield, Chevron is the clear winner, as its 4.5% yield is nearly a full percentage point higher than ExxonMobil's 3.6%, which is nothing to sneeze at.
NYSE: CVX
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The interesting thing about ExxonMobil and Chevron is that it sometimes seems like they switch places, performance-wise, over time. Right now, ExxonMobil's operating better as a business and Chevron is facing some headwinds, including an acquisition that's not going as smoothly as hoped. If you're looking to maximize the income your portfolio generates, however, that means Chevron could be the right all-weather energy pick for your portfolio today.
3. TotalEnergies is French; very, very French
TotalEnergies (TTE +0.00%) is also an integrated energy giant. Unlike ExxonMobil and Chevron, which are both based in the United States, TotalEnergies is French. That changes some things about the business, including the fact that much of its revenue come from operations that have little to nothing to do with the U.S. In fact, its exposure to the rest of the world, notably on the production side, is one of the reasons to like TotalEnergies. Because it isn't a U.S. company, it can forge relationships with countries that wouldn't necessarily be possible for a U.S. company to easily deal with.
However, the bigger reason to like TotalEnergies is its increasing exposure to electrical power, notably including clean energy like wind and solar. It stands apart from all its direct peers in this commitment, which makes it a hedge of sorts against the ongoing clean energy transition. And, as with oil and natural gas, it can operate in countries that would basically be off limits to U.S. competitors.
NYSE: TTE
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TotalEnergies has more leverage than either Chevron or ExxonMobil, which is actually pretty normal for a European integrated energy giant (these companies carry more cash as a way to offset the increased financial risk). However, it stands miles above its European peers on the dividend front.
During the coronavirus pandemic's height, BP (BP +2.98%) and Shell (SHEL +2.12%) both cut their dividends as they announced they would increase their investment in clean energy. TotalEnergies stood by its dividend while making the same basic commitment. Meanwhile, both BP and Shell have since walked back their clean energy goals, while TotalEnergies has, if anything, picked up the pace of its investment. Its integrated power dividend grew 17% in 2024 and made up roughly 10% of the company's adjusted net operating income.
Most long-term energy investors would probably be better off with ExxonMobil or Chevron, particularly if the goal is exposure to oil and natural gas. However, if you like the idea of owning a resilient energy stock that's preparing for the clean energy transition today, that would be TotalEnergies. It also pays a lofty 5.7% dividend yield (U.S. investors have to pay French taxes on the dividend, but a portion of those taxes can be claimed back come April 15).
Presidents shouldn't drive your investment decisions if you are a long-term investor
Wall Street's investment horizon seems to get shorter and shorter all the time. If you're day trading, which is a terrible investment tactic for most people, news about Trump's fast-moving administration will be a very big deal to you. But if you're a dividend investor who thinks in decades and not days, Trump's administration is just another in a long line of presidential administrations.
Your goal shouldn't be to position your portfolio to handle Trump, good or bad. It should be to position your portfolio so that it can handle anything, good or bad. On that score, ExxonMobil, Chevron, and TotalEnergies are three integrated energy giants that have proven they know how to survive, and continue to reward investors, no matter what president is in the White House.
