Energy companies are some of the most lucrative investments in today's market. Accordingly, I've identified seven energy stocks positioned to offer extraordinary returns without subjecting your portfolio to unnecessary risk.

An energy primer
Energy serves as the foundation of a developed economy. In pursuit of this status, countries like Brazil, India, and China have increased their energy consumption by 83%, 95%, and 243%, respectively, over the last 40 years alone. And as you can see in the chart below, we can blame this increase for much of the pain we've suffered at the pump.

Editorial

Source: indexmundi.com.

If you can't beat them, join them
Although higher energy prices are anathema to the typical consumer, they're a godsend to companies like ExxonMobil (NYSE: XOM), the world's largest oil and gas producer. As Exxon's vice president of public and government affairs put it last April: "Here's a simple fact of economics ... When prices increase for a commodity like oil, companies that produce and sell that commodity earn more money." At the time, Exxon had just reported a record 69% increase in its 2011 first-quarter profits. And that was despite the ongoing economic malaise!

Of course, Exxon isn't the only company profiting from higher prices. Both Chevron (NYSE: CVX) and ConocoPhillips (NYSE: COP) have experienced similar results. These three companies combined paid more than $240 billion to shareholders in dividends and share buybacks in the last five years alone. And after our Income Investor analysts recommended Chevron to their members last year, it increased by 27%, all while paying a 3% dividend.

Investors can profit by identifying energy companies that will continue to benefit from these trends, without subjecting their portfolios to unnecessary risk. In the current market, I believe you can do so by investing in big, stable companies that trade at reasonable prices. The seven energy companies I highlight in the table below have market caps exceeding $15 billion, and earnings and dividend yields that beat the broader market.

Company

Earnings Yield

Dividend Yield

BP (NYSE: BP)

16%

3.2%

Total (NYSE: TOT)

15.6%

4.5%

Marathon Oil (NYSE: MRO)

12.7%

3.5%

Eni S.p.A. (NYSE: E)

12.1%

5.2%

ConocoPhillips

11.8%

3.8%

Chevron

11.5%

3%

ExxonMobil

10.3%

2.5%

S&P 500

7.4%

2.3%

Source: Morningstar.com.

The years to come
I believe energy companies will make shareholders loads of money in both dividend payouts and share-price appreciation. But identifying the right business in which to invest is nevertheless fraught with risk and uncertainty. To follow the companies identified in this article, click here to add them all to your watchlist.

Foolish contributor John Maxfield does not own shares of any company mentioned above. Motley Fool newsletter services have recommended buying shares of Total and Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.