Over the past few years, the rapid growth of the cloud, artificial intelligence (AI), and data center markets has outpaced global energy supply, leading to a global energy deficit. Geopolitical conflicts, tariffs, and sanctions have been exacerbating that pressure.
To profit from that trend, investors should invest in a few well-run energy companies that pay generous dividends and distributions. Let's take a look at two of my favorite income-generating energy stocks -- Chevron (CVX 1.51%) and Enterprise Products Partners (EPD +0.25%) -- and see why they could fund their investors' retirements over the next few decades.
Image source: Getty Images.
Chevron
Chevron, one of the world's largest integrated companies, is a classic dividend stock that pays a forward yield of 3.6% and has raised its payout for 39 consecutive years. It provides upstream and downstream services, and it produces chemicals, plastics, and industrial materials.
NYSE: CVX
Key Data Points
Chevron gets most of its oil and natural gas from the U.S., Kazakhstan, and Australia, so it's less exposed to the Middle East conflict than most of its big oil peers. However, soaring oil prices will still boost its upstream profits, generate more cash for its dividends and buybacks, and improve the overall economics of its expensive megaprojects.
From 2025 to 2028, analysts expect Chevron's EPS to grow at a 16% CAGR. That growth will be fueled by the expansion of its newer Tengiz Field in Kazakhstan, which aims to produce about 1 million barrels of oil per day, as well as the expansion of its main oil field in the Permian Basin, which already produces over 1 million barrels of oil per day.
Chevron will also launch new deepwater projects in the Gulf of Mexico, expand its natural gas projects in Australia, and increase its presence in Guyana, one of the world's fastest-growing oil regions, through its recent takeover of Hess. It expects to increase its total oil production by 2%-3% annually through 2030. Those catalysts all make Chevron an easy way to profit from the energy boom, and its stock still looks reasonably valued at 22 times next year's earnings.
Enterprise Products Partners
Enterprise Products Partners is a midstream company that operates more than 50,000 miles of pipeline across 27 states. By charging upstream and downstream companies to use its pipelines to transport oil, natural gas, natural gas liquids (NGLs), and other refined products, it operates a "toll road" model that is well-insulated from volatile commodity prices. However, it will also profit from the soaring demand for more oil and natural gas.
NYSE: EPD
Key Data Points
Enterprise Products is a master limited partnership (MLP) that blends its income with a return of capital to pay tax-efficient distributions instead of traditional dividends. However, the trade-off is that it requires a separate K-1 tax filing every year. MLPs also need to generate at least 90% of their gross income from "qualified sources" such as energy infrastructure and real estate.
Enterprise Products pays a forward yield of 5.8%, and it's raised that payout annually for 28 consecutive years. Last year, its operational distributable cash flow (DCF) of $7.9 billion easily covered its $4.8 billion in distributions -- leaving plenty of room for future hikes.
From 2025 to 2028, analysts expect Enterprise Products' earnings per unit (EPU) to grow at an 8% CAGR. That stable growth should be driven by the expansion of its pipelines across the Permian Basin, the Neches River, Morgan's Point, and other resource-rich regions. At $38, its stock still looks like a bargain at 12 times next year's EPU. So if you want to invest in the energy sector but can't stomach volatile commodity prices, Enterprise Products might be a great buy.
