If you are looking for a dividend-paying energy stock to add to your portfolio in 2026, you can go in two broad directions. You can focus on an energy company with material exposure to oil and gas prices, like Chevron (CVX +3.45%), or you can try to avoid commodity risk by buying a midstream business like Enterprise Products Partners (EPD 0.71%). Here's how to decide.
Enterprise wins on yield
Enterprise Products Partners has an impressive 6.2% yield, backed by 27 consecutive annual distribution increases. That's roughly as long as the master limited partnership has been public, so it has a proven track record of being a reliable income investment. The trade-off for that high yield is that the yield is likely to make up the lion's share of your return over time.
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That's not bad; it just means that you shouldn't expect much beyond slow and boring from Enterprise. In fact, it's little more than a toll-taker, charging fees for the use of its energy infrastructure assets. That allows it to avoid the risk of commodity volatility, which might be exactly what you want if you are a risk-averse dividend investor.
NYSE: EPD
Key Data Points
Chevron takes on more commodity risk
Chevron's business model is more diversified, with exposure to the upstream (oil and gas production), midstream (pipelines), and downstream (chemicals and refining) segments of the energy industry. That approach leaves the company exposed to energy price volatility, but it helps to soften the peaks and valleys inherent to commodity price swings.
NYSE: CVX
Key Data Points
Chevron's yield is 3.9%, and the dividend has been increased annually for over three decades. It has achieved that by being financially conservative, noting its debt-to-equity ratio is very low at 0.22x. This allows management to add leverage during oil downturns to support the business and the dividend until prices recover, as they always have historically. Even conservative investors should appreciate Chevron.
Which investment is better for 2026?
There is no way to predict the future, but if oil prices rise sharply, Chevron should handily outperform Enterprise in 2026. If oil prices stagnate or fall, Enterprise will likely be the winner thanks to its reliable and lofty distribution.
In other words, if you emphasise income and safety, Enterprise will likely be the winner for your portfolio. If you are looking for exposure to oil prices, perhaps believing higher commodity prices are in the cards, you'll want to buy Chevron.
