12 Best Energy Stocks to Invest in December 2023

The global energy sector is vast – covering both fossil fuels and renewable sources. This includes everything from crude oil and natural gas to solar, wind, and nuclear power.

In this guide, we analyze the 12 best energy stocks for investors in 2023. Read on to discover which energy companies offer the greatest upside potential and the most generous dividend policies.

Best Energy Stocks to Buy Now in 2023

Here’s an overview of the 12 best energy stocks to buy right now:

  1. ConocoPhillips: ConocoPhillips is one of the largest oil and gas companies globally. It explores, produces, and supplies energy on multiple continents, including North America, Europe, and the Middle East. ConocoPhillips is a solid dividend payer; running yields are currently at 3.77%. This energy stock has seen modest growth year-to-date at just 6.4%. However, over a five-year period, ConocoPhillips stock is up 63%.
  2. First Solar: With renewables set to play a major role in the future of energy supply, First Solar could be worth a look. This renewable energy company specializes in solar panel manufacturing. With a market capitalization of just $16 billion, there’s plenty of room for growth. Although there isn’t a dividend policy in place, First Solar stock is up 232% over the prior five years. It’s also trading 34% below its 52-week high, which offers an attractive entry price.
  3. Shell: Shell is a UK-based energy stock and one of the world’s largest oil and gas producers. Over the prior 12 months, Shell has outperformed most of its peers with stock gains of 32%. What’s more, Shell is building short-term momentum, with the stock up 6% in the past week. Shell is currently offering a running dividend yield of 3.49%.
  4. NextEra Energy: NextEra Energy is a US-based company that sells clean and affordable energy to over 5.8 million consumers. This energy stock will appeal to value investors, considering that NextEra Energy is trading 32% lower than one year prior. 23% of its stock price losses have occurred in the past month. This is because of a reduction in its dividend guidance, which resulted in a market sell-off.
  5. China Petroleum & Chemical: Global diversification is important when investing in energy stocks, so China Petroleum & Chemical also makes our list. This is a large-cap oil and gas producer that supplies the Chinese market. Not only is China Petroleum & Chemical stock up 24% over the prior 12 months – but it’s offering a huge running dividend yield of 9%.
  6. ExxonMobil: One of the largest stocks on the NYSE, ExxonMobil is a global oil and gas producer with a market capitalization of over $442 billion. This energy stock has increased by 12% over the prior 12 months and is offering a running dividend yield of 3.3%. It’s just been announced ExxonMobil will acquire Pioneer Natural Resources for a reported $60 billion, which is massive news for the sector.
  7. Plug Power: Plug Power is a US-based hydrogen company that serves the electric vehicle industry. It offers a more efficient and environmentally friendly alternative to conventional batteries. Plug Power stock is up 316% over the past five years. Currently, its market capitalization is $4.5 billion. Investors are watching the incoming US government’s announcement on which hydrogen stocks will receive a share of its $7 billion grant; Plug Power is tipped to be one of them.
  8. Cenovus Energy: This oil and gas company has refinery operations in Canada and the US. It has a market capitalization of $38 billion and over the prior 12 months, has seen growth of almost 20%. This energy stock offers a consistent dividend program, but the running yield is currently just 2.02%. Cenovus Energy has a solid balance sheet and is primed for further growth in the coming years.
  9. Cameco: If you’re interested in nuclear stocks, Cameco is worth considering. It’s one of the largest producers of uranium globally and the stock is up 233% in the past five years. Recent price performance has also been strong, with Cameco stock increasing by 67%. Cameco offers a small dividend yield of 0.24% based on current prices.
  10. Clearway Energy: Clearway Energy is a growing renewable energy company based in the US. It specializes in solar and wind power and has a gross operating capacity of 9.3 GW. Although Clearway Energy stock is down 26% over the prior year, it’s up 15% this week. Therefore, momentum is on the firm’s side. What’s more, Clearway Energy is offering a huge running dividend yield of 7.48%.
  11. Diamondback Energy: Diamondback Energy is worth considering if you want exposure to US shale oil and gas. This Texas-based company has seen a stock price surge in recent days, with growth of over 10% this week. Diamondback Energy is also offering an attractive running dividend yield of 4.3%. Although Diamondback Energy reported poor quarterly earnings, it has reduced its average cost supply by 29% year-over-year.
  12. Marathon Oil: Marathon Oil is a hydrocarbon exploration company with onshore operations in Texas. It also has offshore locations around Equatorial Guinea in Central Africa. Marathon Oil has seen growth of over 10% in the prior five days. According to 18 out of 28 sell-side analysts, Marathon Oil is rated a ‘Buy’. This energy stock is offering a running dividend yield of 1.51%.

Read on for our full analysis of the above Energy stocks list.

A Closer Look at the Top Energy Stocks to Buy

We’ve researched the markets extensively to bring you the best energy stocks to buy. Although energy stocks are cyclical, we focused on companies with the greatest long-term upside. We also considered energy stocks with solid dividend yields, enabling you to earn passive income.

1. ConocoPhillips – Global Oil and Natural Gas Company Involved in Worldwide Exploration and Production

ConocoPhillips is a global oil and natural gas company involved in exploration and production. It has energy operations in every corner of the world, ranging from the US and Canada to Europe and the Middle East. ConocoPhillips stock is listed on the NYSE with a market capitalization of $144 billion.

Like many energy stocks, ConocoPhillips is a solid dividend payer. It’s currently offering a running dividend yield of 3.77%. As per recent guidance, ConocoPhillips has an average cost supply of just $32 per barrel. This is below its target of $40. In terms of its stock price performance, ConocoPhillips is up 6.4% year-to-date.

ConocoPhillips stock price

Over a five-year period, ConocoPhillips stock has increased by 63%. Looking at its most recent annual financials, ConocoPhillips reported a 72.69% increase in revenues, year-over-year. The firm also saw a net income increase of 131% and net margins rose by 33.91%.

ConocoPhillips stock also saw a 124% increase in earnings per share. The firm also has a robust balance sheet. Annual financial statements showed a 40.24% increase in cash and short-term investments – up to $9.24 billion. Moreover, while total assets increased by 3.49%, liabilities rose by just 1.26%.

2. First Solar – Global Oil and Natural Gas Company Involved in Worldwide Exploration and Production

First Solar is one of the best energy stocks to buy now from the renewables industry. This US-based company specializes in solar panel manufacturing. Therefore, its stock price valuation is less reactive to global oil and gas prices. Nonetheless, First Solar has seen notable growth in recent years.

For example, the stock is up 232% on a five-year basis. That said, year-to-date, First Solar is up just 3.8%. Although First Solar was founded in 1999, it doesn’t pay dividends. As such, this energy stock is all about long-term growth. Listed on the NASDAQ, First Solar has a market capitalization of $16 billion.

First Solar stock

Considering renewable energy is an under-tapped market, First Solar has plenty of room for growth. In the short term, investors are looking at First Solar’s 52-week high of $232. Based on current stock prices, this would require an upside of 53%. Moving onto First Solar’s most recent annual statement, revenues were down 10.4% to $2.6 billion.

What’s more, operating expenses saw a 20.7% increase. However, operating expenses were just $350.6 million overall, which is a small fraction of First Solar’s income. Furthermore, its most recent quarterly earnings call was very positive. Revenues were up 30.55% year-over-year and net income rose by 205%. As such, we rank First Solar as one of the best solar energy stocks for 2023.

3. Shell – Top-Performing Oil and Gas Stock With 1-Year Gains of 32% and a High Dividend Yield 

Shell is a UK-based energy company specializing in oil and gas exploration. It’s primarily listed on the London Stock Exchange but also has listings on the NYSE and Euronext Amsterdam. This gives you plenty of options as an investor, as it trades in three currencies. Shell is one of the best energy stocks to buy for price momentum.

Over the prior 12 months, Shell stock has increased by 32%. This is considerably higher than the sector average. What’s more, Shell is also offering an attractive running dividend yield, currently at 4.23%. Therefore, Shell is ideal for combining stock price appreciation and income.

Shell stock price

At 8.14 times, Shell also has a competitive P/E ratio. This highlights that its current stock price momentum is justified and that further growth could be on the table. In terms of its financials, Shell had a disappointing quarter. Revenues declined by 25.4% to $74.5 billion.

Operating expenses increased by 6.5% to $9.7 billion. That said, Shell’s annual statements provided very positive results. For example, there was a 45.8% increase in revenue, year-over-year. Shell was also able to reduce its annual operating expenses by 13.3%.

4. NextEra Energy – Large US-Clean Energy Supplier With a Stock Price Discount of 32%

NextEra Energy is one of the best energy stocks to buy for value investors. Compared to its stock price 12 months ago, NextEra Energy is now trading at a 32% discount. That said, the majority of these declines have occurred in the past month – with NextEra Energy down 23%.

This is due to NextEra Energy’s weakened dividend guidance. Previously, the firm aimed to increase dividend payments by 12-15% until at least 2026. However, the board has since reduced its dividend rising targets to 6%. In our view, this doesn’t warrant such a sharp stock price decline.

NextEra Energy stock price

After all, NextEra Energy is still offering a running dividend yield of 3.63%. Moreover, NextEra Energy’s most recent quarterly report produced phenomenal results. For example, revenues were up 41.7% to $7.3 billion and net income rose by 102% to $2.8 billion. EBITDA saw a significant rise too – up 100% to $4.41 billion.

NextEra Energy was also able to increase its net profit margins by 42.8%. That said, the firm’s balance sheet took a hit during the quarter – cash and short-term investments declined by 44.88% to just $1.5 billion. There was also a 6.29% increase in total liabilities, now at $113.9 billion.

5. China Petroleum & Chemical – Gain Exposure to the Chinese Energy Market [Running Dividend Yield of 9%]

China Petroleum & Chemical stock allows you to gain exposure to the Chinese energy market – which is substantial. This energy firm specializes in refined oil and gas products, alongside synthetics resins. From a price perspective, China Petroleum & Chemical is one of the best energy stocks to buy right now.

Over the prior 12 months of trading, the stock has increased by over 24%. Moreover, further growth could be in line, as China Petroleum & Chemical recently announced a share buyback program. Not only that but China Petroleum & Chemical is one of the best dividend payers right now.

China Petroleum & Chemical stock price

Its running dividend yield is at 9% – well above the sector average. That said, China Petroleum & Chemical reported weak results in its most recent earnings call. Revenues were down 4.57% year-over-year and net income took a 27.8% hit. However, operating expenses also declined by 5.9%, which is notable.

Its balance sheet could also do with improvements, as cash and short-term investments declined by 35.5%. Nonetheless, China Petroleum & Chemical has strong stock price momentum and its 9% dividend yield could be too good to turn down. China Petroleum & Chemical trades on the Hong Kong Stock Exchange.

6. ExxonMobil – Mega-Cap Energy Stock With an Improved Balance Sheet and a Proposed $60 Billion Acquisition Lined Up

ExxonMobil is another mega-cap oil and gas producer to consider for your portfolio. Listed on the NYSE, it has a market capitalization of over $442 billion. It has exploration locations all over the world, ranging from Qatar and the US to Indonesia and Papua New Guinea.

ExxonMobil stock has enjoyed growth of 12% over the prior 12 months. Over a five-year period, the stock is up 35%. ExxonMobil is also a solid dividend payer – running yields currently stand at 3.3%. We also like the recent announcement that ExxonMobil is set to acquire Pioneer Natural Resources – which is one of the best liquid energy stocks.

ExxonMobil stock price

The deal is reported to be worth $60 billion – further increasing ExxonMobil’s already dominant market share. In addition, ExxonMobil’s most recent annual statement yielded excellent results. Revenues were up 44.1% to $402.2 billion and operating expenses actually declined by 1.80%. Furthermore, net profit margins increased by 67.8% and earnings per share rose by 161.3%.

However, its most recent quarterly earnings were disappointing – revenues declined by 27.2% year-over-year. On the flip side, ExxonMobil shored up its balance sheet in the prior quarter. Cash and short-term investments saw a 56.5% increase to $29.53 billion. Moreover, ExxonMobil reduced its total liabilities by 14.7%.

7. Plug Power – Trending Hydrogen Stock Tipped to Receive a Significant Grant From the US Government 

Plug Power is one of the best hydrogen energy stocks to consider. This US-based company manufactures hydrogen fuel systems, offering an alternative to traditional batteries. Its products are used by electric vehicle companies, so Plug Power serves a high-growth market.

Plug Power is listed on the NASDAQ exchange with a market capitalization of $4.5 billion. It doesn’t pay dividends but has witnessed rapid growth in recent days. In fact, Plug Power stock is up nearly 18% this week. This could be because of the US government’s impending announcement of its $7 billion grant for hydrogen projects.

Plug Power stock price

Plug Power has a great chance of being a beneficiary, as highlighted by its recent stock price surge. Over the longer term, Plug Power stock has performed well. For instance, Plug Power: is up 316% over the prior five years. That said, the stock is down 60% on a 12-month basis. In its most recent quarterly report, Plug Power saw a 72% increase in revenues – up to $260.1 million.

However, Plug Power still made a quarterly loss of $236 million. As such, its earnings per share currently stands at negative $0.35. Although Plug Power’s balance sheet saw a 65% decline in cash and short-term investments, its financial position remains strong. It has over $5.5 billion in assets and just $1.84 billion in liabilities.

8. Cenovus Energy – Canada-Based Oil and Gas Producer With Refinery Ownership in the US 

Cenovus Energy is a Canada-based oil and gas producer that also has refinery ownership in the US. The firm is also invested in a portfolio of alternative energy projects, including exposure to a nuclear fusion power plant. As such, Cenovus Energy is also one of the best fusion energy stocks to consider. Although the firm was founded as recently as 2009, it already commands a market capitalization of over $38 billion.

Listed on the NASDAQ, Cenovus Energy is another energy stock that has witnessed strong price momentum in recent days – it’s up nearly 8% this week. Over a 12-month period, Cenovus Energy stock is up almost 20%. Five-year returns amount to 133%, so Cenovus Energy is still firmly in growth mode. What’s more, Cenovus Energy also has a consistent dividend program in place. That said, its running dividend yield is currently just 2.02%.

Cenovus Energy stock price

Cenovus Energy reported poor financials in its most recent quarterly report. Revenues were down 36.18% to $12.2 billion. Moreover, there was a 64.3% decline in net income – down to just $866 million. However, annual financial statements were very positive. Over the previous financial year, revenue was up 44.3% to $66.9 billion, while net income rose almost 1,000% to $ 6.4 billion.

Cenovus Energy also has a healthy balance sheet. Total assets and liabilities currently stand at $53.7 billion and $26.4 billion, respectively. Although Cenovus Energy’s quarterly earnings reported over $2.1 billion in cash and short-term investments, this is a 41.3% decline year-over-year.

9. Cameco – One of the Largest Uranium Producers Globally With 5-Year Returns of 223% 

Cameco is one of the best nuclear energy stocks for performance. Based in Canada, it’s one of the world’s largest uranium producers. This stock has great momentum, with Cameco up nearly 67% over the prior 12 months. Long-term investors have also done well, with Cameco stock increasing by 223%.

With a market capitalization of $16 billion, there’s still plenty of room for this nuclear energy stock to grow. Cameco also has a small dividend program in place, currently yielding just 0.24%. The key issue with this stock is that it has a huge P/E ratio – currently at over 229 times.

Cameco stock

This is because Cameco’s stock price is growing significantly faster than its earnings growth. That said, it has a robust balance sheet that can weather any sector-wide storm. As per its most recent annual financial statements, Cameco has over $2.2 billion in cash and short-term investments.

Although total liabilities stand at $2.8 billion, it has over $8.6 billion in assets. That said, like many stocks in this sector, Cameco produced poor quarterly results. It saw a 13.5% decline in revenue and net income dropped 83.6% to $13.69 million.

10. Clearway Energy – Renewable Energy Stock With 15% Gains in the Prior Five Days  

Clearway Energy is a US-based renewable energy company with exposure to solar and wind operations. It has over 350 renewable energy projects within its portfolio and a gross operating capacity of 9.3 GW. Clearway Energy was founded in 2012, so is still in its early growth stages.

That said, the stock is down 26% over the prior 12 months. In more recent times, Clearway Energy is picking up momentum. Over the prior five days of trading, the stock is up over 15%. Another reason to like Clearway Energy is its generous dividend program. Right now, you’ll get a running dividend yield of 7.48%.

Clearway Energy stock

Clearway Energy is listed on the NYSE and has a market capitalization of $3.4 billion. The firm’s most recent quarterly earnings saw a 10.3% rise in revenues – up to $406 million. Notably, while revenues increased, operating expenses declined by 0.7%. This shows that Clearway Energy has developed efficient operations.

Its balance sheet is also relatively healthy. Total assets and liabilities stood at $12.6 billion and $8.4 billion respectively. That said, cash and short-term investments are on the low side, currently at just $581 million. Its P/E ratio of 29.68 times is also considered high. That said, this is often the case with renewable energy stocks that are still in their growth phase.

11. Diamondback Energy – Texas-Based Shale Oil and Gas Producer With a Solid Dividend Program   

Diamondback Energy is a Texas-based energy company involved in the development, exploration, and distribution of shale oil and gas. The firm is listed on the NASDAQ and has produced excellent returns in recent days – the stock is up over 10% this week. Year-to-date, Diamondback Energy is up nearly 21%.

It has a market capitalization of $24 billion and a current P/E ratio of just 8.2 times. This could highlight that Diamondback Energy is trading below its fair value. That said, growth has been sluggish over the longer term, with Diamondback Energy stock up just 25% over a five-year period.

On the flip side, we like that Diamondback Energy has a solid dividend program. The stock is currently offering a running dividend yield of 4.3%. According to Reuters, Diamond Energy has an average cost supply of $49.72 per barrel. When compared to 12 months prior, this is a reduction of 29%.

However, Diamondback Energy’s most recent quarterly performance was below expectations. For example, quarterly revenues declined by almost 32% year-over-year. Moreover, operating experiences increased by 27.7% to $691 million. There was also a 47.9% decline in earnings per share.

12. Marathon Oil – 10% Price Growth in 1 week of Trading and a Competitive P/E Ratio

Marathon Oil is a US-based energy company focused on hydrocarbon exploration. It has onshore oil operations in Texas and is also exploring offshore locations in Equatorial Guinea. Marathon Oil stock is listed on the NYSE with a market capitalization of $16 billion.

With a P/E ratio of just 8.36 times, this energy stock offers good value. Although Marathon Oil has consistently increased dividends in recent years, the running yield is currently just 1.51%. That said, Marathon Oil recently repurchased $372 million worth of stock from the open market; further buybacks could be seen in the following quarter.

Marathon Oil stock price

Like many energy stocks, Marathon Oil has seen rapid growth in recent days. This week, the stock is up over 10%. However, gains of just 3.3% have been made year-to-date. Over a 12-month period, Marathon Oil stock is down 3.4%. Quarterly revenues were disappointing too, down 31.7% year-over-year to $1.49 billion. Even so, operating expenses saw a slight increase to $678 million.

Nonetheless, Wall Street is bullish on Marathon Oil’s long-term potential. According to recent sell-side analyst ratings, 18 out of 28 rate Marathon Oil stock a ‘Buy’. While just 1 analyst rates the stock a ‘Sell’. The average price target for the next 12 months is $33.28. Based on current prices, this would represent an upside of 25%.

Our Methodology When Rating the Best Energy Stocks

There are more than 200 energy stocks listed on the NYSE and NASDAQ – and even more on international exchanges. Therefore, we developed an empirical methodology when ranking the 12 best energy stocks for 2023.

Here’s an overview of our research and analysis methods:

  • Industry: Our methodology considered many industries within the energy sector. This includes oil and gas exploration, production, and distribution. We also explored energy companies involved in equipment services, refineries, and supply chains. Renewable energy companies were also considered, as this is a market set for considerable growth.
  • Production and Break-Even Point: We placed a strong focus on production levels when analyzing the best energy stock to buy. For instance, how many barrels per day are being delivered in relation to the broader market. We also examined the average cost price per barrel for the major energy suppliers. This determines profitability in relation to global prices.
  • Fundamental Data: Highly-ranked energy stocks have strong fundamentals. This means growing revenues, income, and net margins. From a cost perspective, we prefer energy stocks with efficient operating expenses and a robust balance sheet. The latter includes sufficient cash flow and manageable debt levels.
  • Price Performance: Our research methods also prioritized energy stocks with strong price momentum. For instance, how each energy stock has performed in relation to the broader benchmark index. We examined price action in both bullish and bearish markets.
  • Dividend Income: Energy companies have some of the best dividend programs in the stock market. Therefore, we not only looked for companies with consistent dividend payments but high running yields. Our methodology considered dividend yields above 4% as attractive.

What are Energy Stocks?

Energy stocks form a crucial part of the global economy. It’s a broad sector that contains many different industries. At its core, oil and gas companies represent the vast majority of the energy sector. These are companies responsible for exploring, producing, and distributing energy to the domestic and international markets.

This sector also includes renewable energy companies. These are involved in producing green and sustainable energy sources, such as wind and solar. Coal and nuclear energy companies also play a major role in this sector.

Nonetheless, energy as a whole is a cyclical market. This means that when global energy prices are high, the majority of the industry performs well. And conversely, low energy prices often result in a sector-wide downfall. Therefore, investing in energy stocks is often about timing.

Energy prices Bloomberg

Another consideration to make is that energy stocks are highly reactive to macro-economic events. For example, when tensions increase in key oil-producing regions, energy stocks often rise in value. This is because increased tensions can disrupt the oil and gas supply chain, so global energy prices rise.

This is why it’s important to have a firm grasp of global events when investing in energy stocks. For example, you’ll need to keep tabs on OPEC (Organization of the Petroleum Exporting Countries) meetings to assess supply and demand targets. You’ll also need to analyze fundamental data, such as earnings reports and balance sheets. After all, just because oil and gas prices are high, this doesn’t mean your chosen energy stocks will perform well.

Why Invest in Energy Stocks?

Let’s explore why energy stocks could be a great addition to your investment portfolio.

Energy is a Necessity Globally

Energy is a crucial commodity that fuels the global economy. This means that you’re investing in companies that produce value for everyday citizens.

After all, energy is required for transportation, supply chain movements, aviation, heating, and much more. Therefore, energy will always be in demand, irrespective of how the economy is performing.

Energy Companies are Great Dividend Payers

If you like investing in companies that produce regular income, energy stocks are ideal. The majority of large-cap energy companies have robust balance sheets and access to plenty of cash. Not only does this enable them to pay dividends but make regular increases.

Dividend yields average about 3% in the energy industry, although some companies pay much more. For example, China Petroleum & Chemical is currently offering a running dividend yield of 9%. Clearway Energy is also offering a high yield at 7.48%. And by holding Diamondback Energy stocks, you’ll get a running yield of 4.3%.

What is the Running Dividend Yield?

  • When you search for energy stock prices on Google, you’ll be shown a dividend yield in percentages.
  • It’s important you understand that this is the ‘running’ dividend yield.
  • This takes the firm’s dividend payments over the prior year and divides it into the current stock price.
  • Therefore, if the stock price increases, the running dividend yield will decline – and vice versa.

The Energy Sector is Vast 

Energy is one of the most diverse sectors on the stock market. There are many different types of energy stocks from various niches, services, and markets. This means that you can create a diversified portfolio of energy stocks, which is an important risk-mitigation strategy.

For example, you might want to start off with large-cap oil and gas producers. This includes the likes of ConocoPhillips, Shell, and ExxonMobil. These are established energy companies that have dominated the sector for many decades. Therefore, they offer less volatility than other companies within this market.

best energy stocks to buy

In addition, you might also consider renewable energy stocks. These are companies that produce energy from clean and sustainable sources, such as wind and solar. Clearway Energy and First Solar are worth considering, but there are many others.

Renewable energy stocks typically have a much smaller market capitalization when compared to established oil and gas producers. This means that they’re suitable for long-term growth – especially when you factor in societal shifts toward green energy.

There are many other energy sources worth considering when building an investment portfolio. For example, nuclear energy is a growing market, with companies like Cameco producing significant amounts of uranium on a global basis.

Similarly, there’s growing interest in hydrogen-based energy sources. Plug Power is a good option here, with the firm specializing in hydrocarbon fuel systems. We mentioned earlier that the US government will offer $7 billion worth of grants to domestic hydrogen projects. Plug Power has a great chance of being a beneficiary.

Track the Broader Energy Sector Through Specialist Funds 

There are hundreds of companies operating in the energy sector, so knowing which stocks to buy can be daunting. If you’re a beginner, you might consider a diversified fund that tracks lots of different energy stocks.

Your investment will be managed by the fund provider, meaning they’ll rebalance and reweight the portfolio on your behalf. This means that you can buy the best energy stocks without needing to actively manage your money.

For example, the Energy Select Sector SPDR Fund is a popular option to consider. Incepted in 1988, this energy fund has an expense ratio of just 0.1% per year. What’s more, it tracks 23 different energy stocks. This includes everything from ExxonMobil, Chevron, and ConocoPhillips to Marathon Oil and Pioneer Natural Resources.

Do Energy Stock Funds Pay Dividends?

  • Yes, not only do energy stock funds target capital appreciation, but consistent dividends.
  • Put simply, you will be entitled to a share of the dividends paid by energy stocks within the fund.
  • In most cases, energy funds make a dividend distribution every three months.
  • The best strategy is to reinvest the dividends back into the same fund. In doing so, you’ll increase the rate at which your investments grow through compounding.

Energy Select Sector SPDR Fund

Since the Energy Select Sector SPDR Fund was incepted, it has produced average annualized returns of 8.25%. The best online stock brokers support the Energy Select Sector SPDR Fund.

Oil Prices Have a Direct Impact on Energy Stock Profitability 

There is a direct correlation between global energy prices and energy stock valuations. This is especially the case with energy companies that explore and produce crude oil.

After all, when oil prices are high, this means that energy companies have higher profit margins. This is the same as banks making more money when interest rates are high. Therefore, you can make investment decisions based on global energy prices.

  • Right now, oil trades in the $80-$90 region. However, with Israel recently declaring war against Hamas, we could soon see prices surpassing $100.
  • This is because increased mentions in the Middle East disrupt oil supply chains.
  • With less oil being transported, this increases demand, and thus – prices rise.
  • Most energy stocks will benefit from these supply chain interruptions, which is why the sector is hot right now.

However, high oil prices are a double-edged sword for some segments of the energy sector. For example, renewable energy companies often struggle when prices are high. This is because operational costs can become unviable, especially when producing wind and solar equipment.

Types of Energy Stocks

It’s important to understand the different types of energy stocks that you can invest in.

The main market players are as follows:

  • Oil and Gas: The vast majority of the global energy sector is dominated by oil and gas companies. This includes the exploration, production, refining, and distribution of non-renewable energy to the global markets. Major players include Shell, ExxonMobil, and ConocoPhillips.
  • Renewable Energy: A small but growing segment of the sector consists of renewable energy companies. This includes everything from solar and wind to bioenergy and hydroelectric. As a green and sustainable alternative to fossil fuels, renewable energy stocks are worth considering for the long run. Some of the best green energy stocks include First Solar and Plug Power
  • Nuclear Energy: The jury is still out on what role nuclear will play in the future of energy. On the one hand, nuclear energy offers carbon-free electricity and a high power output. However, uranium generates nuclear waste, which is bad for the environment. If you’re looking for exposure to nuclear energy stocks, consider Cameco – which is one of the largest uranium producers globally.
  • Battery Technology: Some energy stocks offer alternatives to conventional battery manufacturing processes. For example, Plug Power produces hydrogen fuel systems. These are only more efficient than traditional batteries but considerably better for the environment. Plug Power services the broader electric vehicle industry, which is a huge growth market.

How to Pick the Best Energy Stocks to Invest in

Knowing how to pick the best energy stocks is crucial. Read on to discover investment tips that will help you build a solid energy stock portfolio.

Cover Different Energy Industries 

Before choosing individual stocks to buy, it’s best to focus on specific energy industries.

For example, if you’re a long-term investor, you might consider emerging energy sources that aren’t quite as big right now. Renewable energy stocks are a great example, especially those involved in solar and wind.

Many renewable energy stocks trade with small-to-medium market capitalization, so you can target a long-term upside. Moreover, renewable energy stocks are cheap right now, considering that high oil prices are impacting their bottom line.

  • If you’re more of a short-term trader who likes to follow investment trends, you might consider traditional oil and gas companies.
  • These are direct beneficiaries of high energy prices, as they increase their net profit margins.

However, just remember that some oil and gas companies will make a loss when global prices are low. For example, oil companies will have a break-even cost for each barrel sold. ConocoPhillips has a cost price of $32 per barrel, so if prices fall below this it will make a loss (as they did during the pandemic).

Financial Health  

It’s also important to understand the financial health of an energy company before investing. The firm’s balance sheet will give you all the information you need. Publicly traded companies are legally required to release their balance sheet every three months. This ensures that you have an up-to-date understanding of its financial position.

First, you’ll want to assess how much debt the company has. More specifically, debt that needs to be repaid in the short term (within one year). Then, you’ll want to evaluate the firm’s ability to meet its debt obligations. Cash and short-term investments are good figures to look at. You can also assess the firm’s total assets, but these might not be readily available for liquidation.

ConocoPhillips balance sheet

In most cases, large-cap energy companies have robust balance sheets. They hold plenty of cash and can easily manage their liabilities. Conversely, smaller-cap companies – especially those involved in emerging energy sources like solar and wind, often have weak balance sheets. As such, you’ll need to assess whether the firm’s financial health is viable in the long run.

Company Performance   

An energy company’s balance sheet only tells half the story. You also need to assess the firm’s performance over prior periods. Just like the balance sheet, publicly traded energy companies must release their performance metrics every three months.

Earnings reports show you how much revenue the energy company generated in the past quarter. This is then compared to the prior year in percentage terms. If the company has increased its revenue during the prior, this is a good sign.

However, you also need to assess its operating expenses. This is the amount of money the energy company spends to produce its products or services.

  • Ideally, operating expenses should not increase at a faster rate than revenues.
  • For instance, in its most recent earnings report, First Solar saw revenue increases of 30.5% year-over-year.
  • While this is very positive, operating expenses rose by 37.6%. This has a direct impact on net profit margins.

It’s also important to consider broader market conditions when analyzing earnings reports. For example, most oil and gas companies reported weakened earnings in the most recent quarter. This is because global energy prices saw a major decline in mid-2023. Therefore, net income also dropped across the industry.

Dividend Program   

We’ve established that the top energy stocks to watch have a solid dividend program in place. If you’re looking for high dividend income, the first step is to look at the running yield. This gives you the percentage yield based on dividends paid in the prior year, against the current stock price.

One of the highest dividend yields right now is being offered by China Petroleum & Chemical – currently at 9%. However, you should look beyond the running yield when choosing hot energy stocks for income. After all, if the stock price increases, the running dividend yield will decline.

  • A more effective strategy is to look at the consistency of the dividend policy.
  • For example, ExxonMobil is a ‘Dividend Aristocat’ – it’s paid quarterly dividends for 40 consecutive years.
  • Not only that but ExxonMobil has increased the size of its dividend payment every year for four straight decades.
  • This means that ExxonMobil shareholders have continued receiving dividends even during market recessions – such as the 2008 Financial Crisis and the COVID-19 pandemic.

Ultimately, dividends can help you build long-term wealth at a much faster rate – especially if you reinvest each payment back into the market.

Market Capitalization    

You should also consider the market capitalization of an energy stock before making an investment. This will have a direct impact on your upside potential and volatility risk.

For example, currently valued at over $442 billion, ExxonMobil is a mega-cap stock. In reality, its growth potential is a lot more limited when compared to smaller-cap companies. After all, the stock requires significant buying pressure to see any notable increases. In light of this, ExxonMobil uses its retained earnings to offer shareholders consistent dividend increases.

Exxon Mobil stock

At the other end of the scale, small and mid-cap energy stocks have a much greater upside. They have smaller valuations, so have a lot more room for growth. For example, Plug Power – which is one of the clean energy stocks, has a market capitalization of just $4.5 billion. This is just a small fraction of ExxonMobil’s mega-cap valuation.

A good strategy is to invest in a blend of small, medium, large, and mega-cap energy stocks. This will provide your energy portfolio with some much-needed balance.

  • If you’re interested in high-risk, high-return assets, check out our guide on the 10 best penny stocks for 2023.

Which Energy Stock has the Largest Market Capitalization?

  • Saudi Aramco is the largest energy stock by market capitalization.
  • This oil and gas company is part-owned by the Saudi state.
  • It has a market capitalization of 8.12 trillion riyals, which is approximately $2.1 trillion.
  • After that, ExxonMobil is the next largest energy stock. ExxonMobil has a market capitalization of $442 billion.

OPEC Announcements     

As an energy stock investor, it’s crucial that you keep tabs on one of the most important stakeholders – the Organization of the Petroleum Exporting Countries (OPEC). In a nutshell, OPEC is an international body consisting of the largest and most influential oil producers. Led by Saudi Arabia, this includes Iran, Iraq, Kuwait, the United Arab Emirates, Nigeria, and Venezuela.

  • OPEC members regularly meet to discuss oil production targets.
  • If OPEC agrees to increase production output, this means that there is more oil in the market. Higher supplies mean that global oil prices typically decline.
  • And conversely, if OPEC decides to reduce production outputs, global prices generally increase.
  • This should be a reminder that global oil prices can be manipulated, as is the influence of OPEC.

Fortunately, OPEC meetings are public. You can stream them live from the OPEC website. This will enable you to make investment decisions based on the outcome of each meeting.

Where to Get Energy Stocks Tips

Now that you know how to choose the best energy stocks to buy, you can compliment your investments with an online alternative data provider.

You’ll want to choose a provider that offers coverage of a wide range of energy stocks, not to mention low fees and a user-friendly platform.

Considering this important criteria, we rank AltIndex as the best place to research energy stocks online. Read on to discover why.

AltIndex – Trending Alternative Data Provider Offering Unique Daily Stock Alerts, AI-Driven Stock Picks Boasting an 80% Win-Rate 

AltIndex is one of those resources that all energy stock traders need to have in their arsenal. As an alternative data provider AltIndex has quickly made a name for itself as one of the leading stock research tools in 2023. It gives traders and investors a helping hand by providing access to unique alternative data analytics, AI-based stock picks, real-time stock alerts and thousands of daily insights. 

AltIndex works in a way that covers investment analysis from all angles. Put simply, AltIndex’s methodology incorporates a wide variety of alternative data points from job postings, site traffic, social proof and reviews, to download stats, and social media sentiment analysis

By monitoring and analyzing this type of alternative data as well as comparing it to the top competitors research, AltIndex is capable of making accurate stock predictions and trading signals. 

Looking to build a diversified portfolio of stocks ranging from high to low-risk assets? AltIndex uses state-of-the-art solutions that allow traders to stay updated on any news or developments regarding companies within a portfolio. Users who sign up to AltIndex receive real-time stock alerts whenever a significant update or event takes place. For example, if a company suddenly gains followers on social media then a stock alert will be sent to the user’s mobile phone where they can act on the signal immediately. 

The AltIndex platform uses sophisticated AI algorithms and data analytics software to provide its users with smart insights helping to boost their investment strategies in the short and long term. 

What about AI stock pickers? Considering that artificial intelligence has taken a massive developmental leap in recent months, especially when it comes to the likes of ChatGPT, machine learning has infiltrated the investing scene. 

AltIndex is setting itself apart from the crowd for its pioneering work on AI stock picks. Showcasing an impressive win rate of 80% its AI-driven algorithms tirelessly comb through myriads of equities every day to offer traders accurate buy and sell signals. It does this by exploring both traditional and alternative data points to give a well-rounded analysis of how a particular stock is performing and how it could potentially move in the long run. 

The AI software will rank the stocks based on a 1 to 100 scale highlighting the probability of the stocks either beating or underperforming the wider stock markets. AltIndex’s advanced algorithms then provide buy, sell, or hold signals based on the alternative data research. 

 AltIndex analyzes a wide range of stocks from global stock exchanges, with trading signals sent directly to a user’s email address, streamlining the stock tracking process.  

In terms of pricing, AltIndex offers four subscription levels. 

  • AltIndex Free – allows investors to browse the platform and use alternative data which is ideal for anyone looking to test this innovative alternative data provider today. This includes, 20 visits to Dashboards, 2 companies in Portfolio, 1 AI Stock pick, 2 Stock Alerts, Limited Stock Screener, Newsletter, Email support.
  • AltIndex Starter – at $29 per month this membership gives traders access to the AltIndex platform and is a good option for investors monitoring ten companies or less. 
  • AltIndex Pro – at $99 per month the Pro subscription gives users the opportunity to roam through the platform with greater access to more companies, stock alerts, as well as the option to download alternative stock data via the API. 
  • AltIndex Enterprise – It offers premium access packages at discounted rates for investment firms, like hedge funds, and also provides tailored portfolio and data services to meet their specific needs.

For those looking to take their stock investments to the next level with alternative data analytics and AI-driven stock alerts, follow the link below to start exploring the unique AltIndex platform. 



We’ve discussed the best energy stocks to buy to take advantage of rising oil and gas prices. We’ve also considered stocks from alternative energy sources, such as solar, wind, nuclear, and hydrogen.

To conclude, we found that AltIndex offers a complete package for those looking to incorporate alternative data and AI stock picks into their investment strategies.




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Kane Pepi

Kane Pepi is an accomplished financial and cryptocurrency writer who has an extensive portfolio of over 2,000 articles, guides, and market insights. With his expertise in specialized subjects such as asset valuation and analysis, portfolio management, and financial crime prevention, Kane has built a reputation for providing clear explanations of complex financial topics. He holds a Bachelor's Degree in Finance and a Master's Degree in Financial Crime, and is currently pursuing his Doctorate degree, which focuses on investigating the complexities of money laundering in the cryptocurrency and blockchain technology sectors. Kane's wealth of knowledge and experience in the field make…