For investors prospecting the market for oil dividend stocks, deciding among the dozens of energy stocks that are also dividend stocks can be daunting. Making a sound choice can help investors sit back and enjoy watching their portfolios become energized by a steady stream of passive income.
Although oil stocks have often been a profitable choice for investors, rising calls for the adoption of renewable energy may suggest that oil companies -- and oil stocks -- will soon be in decline. A more likely scenario is that companies involved in oil production will continue to play a significant role, especially since petroleum is found in a variety of agricultural, pharmaceutical, and cosmetic products.
In the near term, the market is expected to continue growing. The International Energy Agency (IEA), for example, projects that global oil demand will increase by 2.5 million barrels per day between 2024 and 2030, reaching about 105.5 million barrels per day.
Top dividend oil stocks to consider
There are many options available to investors, but there's no need to burn the midnight oil looking for the most compelling choices. Let's take a look at five of the best.
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Chevron (NYSE:CVX) | $376.2 billion | 3.66% | Oil, Gas and Consumable Fuels |
| EOG Resources (NYSE:EOG) | $73.1 billion | 2.93% | Oil, Gas and Consumable Fuels |
| ExxonMobil (NYSE:XOM) | $635.5 billion | 2.65% | Oil, Gas and Consumable Fuels |
| Kinder Morgan (NYSE:KMI) | $72.7 billion | 3.58% | Oil, Gas and Consumable Fuels |
| Phillips 66 (NYSE:PSX) | $63.8 billion | 3.06% | Oil, Gas and Consumable Fuels |
1. Chevron
Chevron stock is a popular consideration since the business is one of the largest oil companies in the world. The reach of its integrated operations extends into multiple aspects of the oil industry.
NYSE: CVX
Key Data Points
Chevron forecasts production increasing at a compound annual growth rate (CAGR) of about 6% from 2024 through 2026, assuming that the price of oil benchmark Brent crude averages $70 per barrel. This, in turn, should contribute to growing free cash flow (FCF). From Permian assets alone, management projects FCF growth of about $2 billion by 2026.
Management believes that the production growth will contribute to greater profitability. Although Chevron reported a 7.2% adjusted return on capital employed (ROCE) in 2025, management is targeting a 3% (or more) ROCE improvement by 2030 if the price of Brent crude averages $70 per barrel. Similarly, with the same price sensitivity, Chevron projects greater free cash flow.
Traded on the New York Stock Exchange for more than a century, Chevron is now the only energy stock in the Dow Jones Industrial Average. For 39 consecutive years, Chevron has increased its dividend, and its dividend growth may continue in the near future. Management has said it expects to increase its distribution to shareholders over the next five years if Brent crude averages more than $50 per barrel.
2. EOG Resources
Founded in 1985, EOG Resources has developed into one of the largest publicly traded exploration and production (E&P) companies based on market capitalization. Although the company has assets in Australia and the Caribbean, EOG's properties in the U.S. -- in the Rocky Mountains, Permian Basin, and South Texas -- are predominantly responsible for the company's oil production.
NYSE: EOG
Key Data Points
Presumably, its many untapped resources will continue to be a source of production. As of the end of 2025, the company reported it had total estimated net proved reserves of 5.5 billion barrels of oil equivalent, suggesting that EOG has plenty of opportunities to extract oil from the ground.
One of the most appealing aspects of EOG Resources is its robust financial position. Many E&P companies weigh down their balance sheets with large debt loads to finance their operations, yet EOG Resources adopted a conservative approach to leverage, ending 2025 with a net debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio of 0.4.
To ensure its financial health, the company has targeted a total debt-to-ratio below 1.0 in the event of a downturn in energy prices, with the oil benchmark West Texas Intermediate dropping to $45 per barrel.
Proving adept at managing its capital, EOG has also demonstrated a commitment to returning cash to shareholders. The company paid $3.95 per share in dividends for 2025, representing a 14.5% CAGR since 2000. Plus, it generated $4.7 billion of free cash flow in 2025, all of which it returned to shareholders through dividends and share repurchases.
Given its track record of rewarding investors and generating strong free cash flow that has averaged 22.5% of revenue over the past three years, EOG Resources is an oil dividend stock worth digging into.
3. ExxonMobil
Operating conventional oil and gas assets in almost 20 countries around the world, ExxonMobil reported 2025 net production of 4.7 million oil-equivalent barrels daily, and it projects total upstream production will grow to 5.5 million oil-equivalent barrels per day by 2030. But there's much more than conventional assets to the company's upstream business.
NYSE: XOM
Key Data Points
ExxonMobil also operates unconventional, deepwater, heavy oil, and liquefied natural gas (LNG) assets -- a business that grew considerably larger after its acquisition of Pioneer Natural Resources in May 2024. With the acquisition complete, management expects Permian production to grow from 1.2 million barrels of oil equivalent per day in 2024 to about 2.5 million barrels of oil equivalent per day by 2030.
It has upwardly revised its expectations regarding synergies. In its fourth quarter 2025 financial results presentation, management stated it expects annual synergies from the acquisition to total $4 billion -- twice the original estimate.
Like Chevron, ExxonMobil has demonstrated a long commitment -- 43 consecutive years -- to increasing the capital it returns to shareholders through dividends. ExxonMobil is pursuing share buybacks to grow shareholder value. In addition to the $17.2 billion in dividends that the company paid on its common stock, ExxonMobil also repurchased more than $20 billion in stock during 2025.
ExxonMobil continued its work to strengthen its balance sheet, ending 2025 with a debt-to-capital ratio of 14%. That's significantly lower than the 21.4% ratio at the end of 2021 and the 29.2% figure at the end of 2020. With a more robust balance sheet, the company is well-positioned to continue its streak of dividend increases.
4. Kinder Morgan
As the largest energy infrastructure company in the S&P 500, Kinder Morgan is one of the more recognizable names among midstream companies. The self-proclaimed "largest independent transporter of petroleum products in North America" estimates it transports 2.4 million barrels of gasoline, jet fuel, diesel, natural gas liquids, and condensate daily through an expansive 9,500-mile network spanning North America.
NYSE: KMI
Key Data Points
In addition, Kinder Morgan operates 65 liquids terminals that store fuels and offer blending services for ethanol and biofuels. There's ample room for growth as well. Kinder Morgan's project backlog totaled $10 billion at the end of 2025.
When you survey the energy landscape for interesting oil dividend stocks, it's not uncommon to find companies risking their financial well-being to satisfy shareholders with lofty dividends. But that's hardly the case with Kinder Morgan.
Over the past seven years, the company has self-funded its capital expenditures and dividends. To put the dividend's security in perspective, consider that Kinder Morgan has reported an average of more than $1.04 billion in free cash flow after dividends were paid annually over the past five years.
5. Phillips 66
Although Phillips 66 isn't involved in exploration and production, the company has a notable presence across other aspects of the oil industry. The company's midstream business consists of 72,000 miles of pipeline located in the U.S. The company also operates 11 refineries, which have a daily crude throughput capacity of 1.8 million barrels in the U.S. and Europe.
NYSE: PSX
Key Data Points
Phillips 66 refines crude oil and other feedstocks into gasoline, distillates, and aviation fuels. Rounding out the company's downstream business, Phillips 66 markets gasoline, diesel, and aviation fuel through about 7,200 independently owned outlets in 48 states and Puerto Rico, as well as 1,300 company- and dealer-owned outlets in Europe.
Phillips 66 was spun off from ConocoPhillips (COP -0.74%) into its own publicly traded company in 2012. Since it started paying dividends in the fourth quarter of that year through 2025, the company has raised its payout at a 15% CAGR.
Management seems likely to continue returning capital to shareholders through dividends in addition to share buybacks. ⠀ an investor presentation from March 2026, the company affirmed is plan to return over 50% of net operating cash flow to shareholders through share repurchases and dividends.
Advantages and risks of investing in oil dividend stocks
While identifying a desire to invest in oil stocks that pay dividends is a good first step, it's important that potential investors ensure the advantages and risks of investing in oil dividend stocks align with their individual goals. Here are some of the potential benefits of an investment in oil dividend stocks:
- Many energy companies have long histories of paying dividends -- even during times of slumping energy prices.
- Portfolio diversification.
- The energy sector is cyclical, and during periods of rising oil prices, energy companies may boost payouts.
Of course, risks are also present with oil dividend stocks, so investors must acknowledge the following before clicking the buy buttons:
- Sustained downturns in energy prices may motivate companies to conserve capital and maintain financial well-being, leading them to slash or eliminate dividends.
- Many energy companies are diversifying their operations and developing low-carbon businesses, which may lead them to favor growth projects over dividends.
- Energy companies may face oil spills or other environmental disasters that lead to litigation or other financial penalties, prompting them to slash dividends.
What to consider before investing in oil dividend stocks
Before choosing to fuel your portfolio with passive income from oil dividend stocks, there are some important considerations. Looking at the dividend histories of the potential stock purchases is a savvy first step. Investors may find that the stocks in question have a history of boosting payouts and then reducing them.
Another pressing concern is whether companies are jeopardizing their financial health to placate shareholders. There are different ways to determine this, but one place to start is with the payout ratio. If companies consistently return dividends in excess of their profits -- resulting in payout ratios exceeding 100% -- it's a red flag.
How to invest in oil dividend stocks
Once investors decide to hit the gas and proceed with an oil dividend stock investment, there are only a few simple steps they need to take.
- Open your brokerage app: Log in to your brokerage account, where you manage your investments.
- Search for the stock: Enter the stock ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select the order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Strategies for investing in oil dividend stocks
There are numerous investing strategies investors should follow for any stock, but for oil dividend stocks, some factors stand out as more relevant. For one, investors must remember that the prices of oil stocks are highly correlated with energy prices. Should the price of oil drop and oil stocks decline, investors shouldn't panic and race to exit their positions. It's best to remain calm and confirm that the company remains in sound financial health when it reports quarterly financial results.
Also, keeping tabs on the payout ratios of dividend-paying stocks is always smart, but it's especially important for investors in oil dividend stocks not to despair if payout ratios exceed 100%. Instead, investors should examine the company's non-cash charges to see whether they're affecting its profit.
Because exploration and production companies may record significant non-cash charges from depreciation, depletion, and amortization, the company may report earnings that belie strong operating cash flows, an encouraging metric for dividend-paying stocks. Similarly, companies may report impairment charges when commodity prices fall, another non-cash charge that could misrepresent a company's strong performance. Investors will want to pay close attention to both the cash flow statement and the income statement.
Future outlook for oil dividend stocks
With enthusiasm for renewable energy slowing down and global oil demand projected to rise over the next few years, there's little indication that the oil and gas companies are facing insurmountable headwinds. Oil and oil-based products will remain indispensable components of global economies for the foreseeable future. Consequently, the outlook for oil dividend stocks is bright, and those interested in them would be wise to consider them as a way to diversify their passive income streams.
The bottom line
There's no secret formula to identifying the best oil dividend stocks. Still, there are certainly some things that should be on prospective investors' radars, including the company's balance sheet, cash generation, and performance history.
A company may sport a high dividend yield, but if it's not in good financial health, that alluring dividend may not last long. With the above-mentioned companies, investors hunting for oil dividends to power their portfolios don't need to worry much.
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About the Author
Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron, Kinder Morgan, and Phillips 66. The Motley Fool recommends ConocoPhillips and EOG Resources. The Motley Fool has a disclosure policy.
