Best Oil Stocks to Invest in 2024

Oil stocks are back in style after a dismal 2023 when they were dragged down by worries about a potential economic slowdown curbing demand for fuels. While the S&P 500 rose 26% in 2023 driven by soaring tech stocks amid the AI enthusiasm, the oil and gas sector fell by 1.3%. Oil and gas stocks may stage a comeback in 2024. 

The price of crude oil slumped 10% in 2023, at times dipping below $71 a barrel. Crude has been above $75 a barrel, a key level for oil company profitability, in the first three months of this year and appears to be holding steady. As of March 28, the price of Brent was nearly $87 a barrel, and West Texas Intermediate, the U.S. benchmark, was $82 per barrel. 

Crude oil prices are likely to remain high, driven by tight supply, ongoing conflicts in the Middle East and in the Ukraine and rising global demand for energy. That means that the stocks of oil and gas companies, pipeline operators, oilfield services and drilling companies should all benefit. On top of that, oil stocks are known for their above-average dividends. In this guide, we explore 10 oil stocks worth looking at. 

Top Oil Stocks to Buy in 2024

  1. Enbridge: The Canadian utility and pipeline company’s pipelines move roughly 30% of the crude oil produced in North America.
  2. Oneok: The U.S.-based midstream operator provides gathering, processing, fractionation, transportation and storage services for natural gas and crude oil.
  3. SLB (formerly Schlumberger): It’s the world’s largest oilfield services company and the largest offshore drilling contractor.
  4. Halliburton: The oilfield services company provides drilling, well construction and completion and other production services to the oil industry.
  5. Williams Companies: The Tulsa, Okla., company owns and operates natural gas and oil pipelines among its businesses.
  6. Enterprise Products Partners: The master limited partnership owns lucrative oil pipelines and other midstream assets.
  7. Texas Pacific Land: One of the largest private landowners in Texas, it makes revenue from oil royalties.
  8. Chevron: The No. 2 U.S. oil and gas operator has been increasing production and has steadily increased its dividend in recent years.
  9. ExxonMobil: The largest non-government owned energy company has paid down its net debt and is diversifying its interests with low-carbon investments such as carbon capture and storage.
  10. Occidental Petroleum: Warren Buffett’s favorite oil company, based in the U.S., recently bought Midland, Texas-based CrownRock in a cash-and-stock deal valued at $12 billion.

Top Oil Stocks to Invest in 2024

Let’s take a more in-depth look at the top oil stocks to invest in this year:

1. Enbridge – Diversity With an Attractive Moat

It owns oil, gas, and renewable energy power networks in North America and Europe. Its pipelines transport more than a third of the crude oil in the U.S., and its pipelines move more than 20% of the natural gas in the U.S. Also, it’s the largest natural gas utility in North America, with more than 5 million customers.

Enbridge chart

Its business is based more on the amount of oil or gas that moves through its pipelines instead of the actual price of oil or gas. The edge it holds with its miles of pipelines gives it a significant moat and sustainable cash flows. In 2023, Enbridge reported earnings of $5.2 billion, up 123% and earnings per share (EPS) of $2.84, up 122%.

The company has increased its quarterly dividend for 29 consecutive years, including a 3.1% bump this year to $0.915, giving it a better yield than the rest of the stocks on this list, making it an excellent high dividend oil stock.

Ticker  P/E  Dividend Yield
NYSE: ENB 17.13 7.56%

2. Oneok – Expanding its Oil Operations

The U.S. midstream company provides a broad range of services to crude oil and natural gas producers and end-use markets. Oneok’s pipelines primarily serve natural gas companies, but Oneok also has a segment dedicated to crude oil and other refined products, helping oil producers get their crude oil to market. The company significantly grew its exposure to oil late last year when it spent $19 billion last year to buy Magellan Midstream Partners, which has the longest refined petroleum products pipeline system in the U.S. and has the capacity to store more than 100 million barrels of petroleum products.

OneOK chart

In 2023, Oneok had $2.65 billion in net income, or $5.48 in EPS, up 54% and 42.7%, respectively.  Adjusted earnings before interest, taxes, depreciation and amoritzation (EBITDA) were $5.24 billion, up 44.8%. This year, the company said it expects net income to be between $2.61 billion and $3.01 billion, up 5.6% at the midpoint. It forecasts adjusted EBITDA of between $5.9 billion and $6.3 billion, up 16.4% at the midpoint. The company has set contracts and the ability to raise rates. That stability makes it one of the best oil stocks.

This year, the company raised its dividend by 3.7% to $0.99, further improving an already high dividend yield, now nearly 5%. It also approved a stock repurchase program of $2 billion over the next four years.

Ticker  P/E  Dividend Yield
NYSE: OKE 14.53 4.98%

3. SLB (Schlumberger) – Steady EPS, Revenue Growth

SLB, formerly known as Schlumberger, is an oilfield services company, helping provide services for well drilling, fracking, as well as selling software to help oil and gas exploration. It isn’t directly affected by oil prices, but if oil prices rise, exploration and drilling grow, along with the demand for its services. That makes it one of the best oil stocks for the next 10 years.

Schlumberger chart

In 2023, SLB’s revenue rose by 18% to $33.1 billion and its EPS jumped by 37% to $2.91. That growth was fueled by international companies increasing their drilling, using SLB’s expertise. The company said it expects record investment in the Middle East to continue past 2025, especially in Saudi Arabia, the United Arab Emirates, Iraq and Kuwait. The solid year allowed the company to reduce its net debt by $1.4 billion.

Schlumberger returned, through share repurchases and dividends, $2 billion to stockholders in 2023. This year, it raised its quarterly dividend by 10% to $0.275.

Ticker  P/E  Dividend Yield
NYSE: SLB 18.71 2.02%

4. Halliburton – Thriving Amid Industry Reinvestment

Halliburton is the second-largest oil services company in the world, with headquarters in Houston and Dubai. It also is in charge of one of the world’s largest fracking operations. It has 48,000 employees operating in 70 countries. It operates in two segments:  Completion and Production, and Drilling and Evaluation.

Halliburton chartThe company is benefiting now as oil prices have risen, because for the past couple of years, oil companies underinvested in new supply and now they’re ramping up new explorations.

In 2023, Halliburton had $23 billion in revenue, up 13%, and its full-year EPS was $2.92, rising 67.8% from the year before. The company has increased revenue year over year in each of the last 12 quarters. The company has also just increased its quarterly dividend by 6% to $0.17. It bought back $800 million of its shares in 2023 and has plans to buy back an additional $4.1 billion worth of its own shares. Despite all of that, it appears to be underpriced as the stock is trading for less than 14 times earnings.

Ticker  P/E  Dividend Yield
NYSE: HAL 13.35 1.74%

5. Williams Companies – Infrastructure Company Has Stable Income

Most of Williams’s interests are in natural gas, but it also operates deepwater crude oil pipelines and owns production platforms serving the deepwater in the Gulf of Mexico. Natural gas prices have ebbed lately, thanks to a warmer winter that has lessened demand. However, in the long run, the company’s pipelines and production facilities, which are operated with long-term contracts, produce consistent cash flows for Williams.

Williams companies chartIt has pursued revenue growth through acquisitions and has just wrapped up a $1.95 billion purchase of natural gas storage assets from Hartree Partners. Last fall, it spent $1.27 billion to add pipelines in the Denver-Julesburg basin.

In 2023, its adjusted funds from operations (AFFO) rose 6% to $5.2 billion while EPS climbed 5% to $1.91. Its AFFO per share of $4.27 means that its AFFO dividend payout ratio was only 41.7%, leaving room for continued dividend growth.

Speaking of its quarterly dividend, it raised it by 6.1% to $0.4750 in 2024, the seventh consecutive year of increasing it. 

Ticker  P/E  Dividend Yield
NYSE: WMB 14.35 4.95%

6. Enterprise Products Partners – Ultra-high Dividend, Steady Growth

The company’s infrastructure network provides midstream energy services to producers and consumers of natural gas, natural gas liquids, crude oil, refined products and petrochemicals. It’s operated as an oil and gas master limited partnership, which means that it must derive at least 90% of its income from the exploration, production, and transportation of natural resources or real estate.

Enterprise products chart

Enterprise Products’ dividend yield is above 7% and it has an excellent history of increasing its quarterly dividend for 25 consecutive years, including a 3% rise to $0.51 this year. Over the past eight years, its yearly adjusted EBITDA has had a compound annual growth rate of 8.8%. The stock, considering its steady cash flows and consistent dividend raises, appears to a bargain, trading at below 12 times earnings.

It saw revenue decline 14.5% last year to $49.7 billion, but because its margins improved, net income rose by 1% to $5.5 billion and EPS rose 1% to $2.52.

Ticker  P/E  Dividend Yield
NYSE: EPD 11.50 7.11%

7. Texas Pacific Land – Passive Income With Less Risk

Texas Pacific Land owns 868,000 acres of land in West Texas, with most of its land concentrated in the oil-rich Permian Basin. Texas Pacific Land makes its money from oil, gas and water royalties from its land. It also makes money from its pipeline, power line and utility easements.

Texas Pacific Land chartThe company has just completed a three-for-one stock split, meaning investors received three shares for every one they owned. That could be good for the stock, as was trading for roughly $1,685 on March 22. If it was reduced to one-third of that price, the stock would likely be more highly traded because it would be available to more investors at around $561 per share.

While revenue fell 5% in 2023 to $632 million, and EPS fell 8.6% to $52.77, the company’s financials appear to be rebounding. In the fourth quarter, Texas Pacific had revenue of $166.6 million, up 9% year over year. EPS rose 13.8% year on year to $14.73. The company increased its quarterly dividend payout by 7% this year to $3.50 per share.

Ticker  P/E  Dividend Yield
NYSE: TPL 32.37 0.82%

8. Chevron – Best Oil Stock for a Consistent Dividend

Chevron is a worldwide gas and oil producer, with assets in the Permian Basin of Texas and New Mexico, as well as in Kazakhstan, the Gulf of Mexico and Australia. It’s looking to expand its ability to produce oil. Chevron is in the midst of a $53 billion deal to buy Hess, including the Stabroek block oil discovery off Guyana, the largest oil field to have been discovered in nearly 20 years, expected to produce 1.2 million barrels of oil and gas a day by 2027. Chevron must first negotiate with Exxon, which claims it has rights to Hess’s assets in Guyana.

Chevron chartWhile its full-year earnings fell 39.7% in 2023 to $21.4 billion, the stock is underpriced. It has a market cap of $287 billion and as of the fourth quarter, it only had $12.6 billion in net debt. The stock is trading at less than 14 times earnings.

The company returned a record $26.3 billion of cash to shareholders last year, including share repurchases of $14.9 billion and dividends of $11.3 billion. This year, the company increased its dividend by 8% to $1.63, the 37th consecutive year it has increased its dividend. 

Ticker  P/E  Dividend Yield
NYSE: CVX 13.78 4.16%

9. ExxonMobil – Gas Giant Preparing for Zero-Emission Future

ExxonMobil is diversifying its interests, preparing itself for a zero-emissions future. It has begun work on a lithium mining operation in southwest Arkansas, saying it expects the operation to begin producing lithium for global battery and EV markets by 2027, and hopes to produce enough lithium to supply one million EVs by 2030. 

Exxon chart

It has also recently spent $4.8 billion of stock to buy Denbury and now has the largest owned and operated carbon dioxide pipeline in the U.S., used for carbon capture to reduce emissions.

ExxonMobil’s strategy is that by lowering emissions, it can continue selling oil all the while seizing a portion of the carbon capture market, which it sees has the potential to be a $4 trillion market by 2050.

In fiscal 2023, the company led the industry with $36 billion in earnings, though that was 35.3% lower than in 2022. ExxonMobil has raised its dividend for 41 consecutive years, at an average annual rate of 5.8%. Last year, ExxonMobil boosted its dividend by 4.4% to $0.95. It also bought back $17.4 billion of its own shares.

Ticker  P/E  Dividend Yield
NYSE: XOM 12.96 3.30%

10. Occidental Petroleum – Solid Long-Term Hold

Warren Buffet’s Berkshire Hathaway (NYSE: BRK.A) owns roughly 27% of Occidental’s stock. It’s easy to see why the Wizard of Omaha is bullish on the oil producer, which also owns midstream facilities and does chemical manufacturing. Occidental is on solid financial footing and continues to grow production. 

Occidental chart

In the fourth quarter, it produced nearly 7,000 barrels of oil a day day more than it did in the third quarter. That doesn’t count the 170,000 barrels per day it is gaining as part of a $12 billion deal it signed in December to buy CrownRock. The addition should significantly increase the company’s cash flows. The company estimated it would add $1 billion in cash flow this year, and that estimate was based on $70 a barrel (it is now around $85).

Occidental has also been quite active in investing in carbon-capture, saying it believes in time CCS could outstrip its earnings from oil production. Like most oil producers, it saw profits decline in 2023, though. It had $28.9 billion in revenue in 2023, down 22%, while EPS fell to $3.90 from $12.90 in 2022. 

The lower earnings didn’t prevent the company from raising its dividend by 22% this year to $0.22 per quarterly share. It’s well covered with a payout ratio of only 22.7%. It also bought back $1.8 billion of its shares.

Ticker  P/E  Dividend Yield
NYSE: OXY 16.48 1.36%

What Are Oil Stocks?

There are a variety of different kinds of oil stocks. They range from exploration and production stocks that find and drill for oil, such as Diamondback Energy. Then, there are oilfield services companies, such as SLB and Halliburton, which provide services to exploration and production companies, assisting in drilling and well completion.

The sector also includes midstream companies that provide the pipelines and storage facilities used in the delivery of oil products. There are also refining companies that process crude oil into usable products such as gasoline, jet fuel and diesel fuel, and integrated oil companies, such as ExxonMobil and Chevron that are involved in most of the above sectors.

Why Invest in Oil Stocks?

Oil Remains in High Demand

Despite the push for electric vehicles, oil is still a major source of global energy. Demand is expected to remain high in the near future, particularly in developing nations. The high demand, along with the rise in oil prices, should lead to increased profits for oil companies and other companies with exposure to oil, and that should lead to improved returns for shareholders.

It’s a Great Sector for High Dividends

Many oil companies are reliable dividend payers and, in some cases, are dividend aristocrats who have raised their dividends for 25 or more consecutive years. This can provide investors with consistent income, without touching their capital. The dividends for oil companies tend to be above-average as well.

The Industry Is Inflation-Resistant

Oil prices tend to increase along with inflation, making them a good hedge against inflation for investors. Oil is an essential commodity that people need to get to work and perform work.

Oil Stocks Can Be Great Value Stocks

Oil stocks trade at relatively low multiples and considering their long-term potential can be considered value stocks. Including oil stocks in your portfolio can help diversify your holdings and potentially reduce overall risk.

Where to Get Oil Stock Picks and Insights

Investing in oil stocks involves more risk than some other sectors. To find out more about how to pick the best oil stocks, we recommend checking out AltIndex

AltIndex imageAltIndex is a subscription-based service uses alternative data and artificial intelligence (AI) to rate stocks and AltIndex updates its data throughout the day. It tracks this data over time, compares it to other companies, and then uses machine learning to generate investment insights.

Stocks are given a ranking score out of 1 to 100, simplifying the analytical process that can often be very difficult for stock investors. The service has a list of best oil stocks, based on its proprietary AI score, which it updates throughout the day.

AltIndex has more than 10,000 members and provides more than 100,000 stock insights and alerts each day, and has a strong win rate of 75% from its AI stock picks.

You can try AltIndex’s Starter Plan for just $29 a month and receive stock picks directly to your email, as well many other useful features.

Conclusion

Oil stocks appear to be bouncing back this year, but they’re still priced low enough to take advantage of their relatively low valuations and high dividend yields. The excitement about EVs has overshadowed the reality that oil will remain a valuable resource for years to come and oil stocks can still thrive.

Global conflicts have meant that supplies of oil are tightening and oil stocks should benefit from higher prices and not justthe shares of oil producing companies, but those of other companies associated with oil.

References

https://www.bloomberg.com/news/articles/2023-07-05/soaring-interest-rates-are-quietly-transforming-the-oil-market

https://www.offshore-technology.com/news/williams-dj-basin-acquisitions/

https://ir.oneok.com/tools/viewpdf.aspx?page=%7B538CF287-1E26-40A4-A7B6-45170C24EEE0%7D

https://www.texaspacific.com/investors/news-events/press-releases/detail/155/texas-pacific-land-corporation-announces-three-for-one

https://investor.exxonmobil.com/news-events/press-releases/detail/1156/exxonmobil-announces-2023-results

https://www.oxy.com/news/news-releases/occidental-to-acquire-crownrock-strengthening-its-u.s.-onshore-portfolio-with-premier-permian-basin-assets/

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Jim Halley
Editor

I am an experienced journalist who has also worked as an editor and writer at the Savannah Morning News, Salt Lake Tribune, USA Today, Stars and Stripes, and The Motley Fool. I spent the first half of my career in sports journalism, but in recent years have switched to writing about my other passion, stocks, particularly healthcare, real estate and consumer staples stocks. I've won numerous journalism awards from the Associated Press and state press associations and have been a judge for the Georgia Sportswriters Association. I've written one non-fiction book, Just One More Time, about Georgia Southern football, and…