Summary: As global energy needs continue to rise and the transition to cleaner energy sources evolves due to geopolitics, investors remain attracted to the energy sector. Furthermore, some of the best energy stocks pay significant dividends, providing a stable source of revenue. This guide will present the 3 best energy dividend stocks and explain how to buy them using a regulated investing service like eToro.
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What are energy dividend stocks?
Dividend stocks refer to shares in companies that pay out a portion of their profits to stakeholders as dividends, providing a stable source of revenue.
These stocks are particularly attractive to investors looking to establish a reliable passive stream of income, usually monthly, quarterly, or yearly. Additionally, dividend payments do not affect the potential gains from stock face value speculation.
About
Since the energy sector has historically shown resilience and stability, it naturally instills trust, especially in conservative investors. However, their commendable financial performance makes energy dividend stocks suitable for all long-term investors, beginners included.
3 best energy dividend stocks to buy this month
Our comprehensive analysis of well-performing dividend stocks targeted historical performance, market capitalization, dividend yield, and other relevant factors. In conclusion, we have come up with the top 3 energy dividend stock picks for this month:
- Equinor (NYSE: EQNR)
- MPLX (NYSE: MPLX)
- Ecopetrol (NYSE: EC)
Note
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Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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1. Equinor (EQNR)
Equinor ASA (OSE, NYSE: EQNR) is a Norwegian energy company dealing primarily with petroleum on the Norwegian continental shelf but also in Australia, North America, Africa, and South America. Additionally, it has a foothold in multiple renewable energy sectors.
Operating oil-related projects across 36 countries, Equinor is diversifying its operations, becoming a global leader in offshore wind energy production, and joining the global transition towards cleaner and sustainable sources.
In 2020, Forbes Global 2000 listed the company on the 169th spot. Equinor remains one of the best and most popular energy dividend stocks, having a lower annual dividend yield than other candidates on the list (3.88% as of December 2023) but showing stellar profitability charts and considerable assets to back them up.
EQNR stock price today
EQNR estimated annual dividend yield
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2. MPLX (MPLX)
MPLX LP (NYSE: MPLX) is a master limited partnership (MLP) affiliated with Marathon Petroleum Corporation that plays a crucial role in supporting its energy value chain. It is a diversified, growth-focused subsidiary that operates in transporting, storing, and distributing oil, refined petroleum products, and natural gas.
MPLX’s substantial network of pipelines, processing facilities, and terminals across the United States is vital to the nation’s energy infrastructure. With consistently overperforming dividend payments, MPLX is undoubtedly one of the best energy dividend stocks this month. Its dividend yield has remained above 5% for over half a decade. As of December 2023, it stands at 9.29%.
MPLX stock price today
MPLX estimated annual dividend yield
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3. Ecopetrol (EC)
Ecopetrol S.A. (NYSE: EC; BVC: ECOPETROL) is Colombia’s largest oil and gas company and one of South America’s largest petroleum producers. Its operations primarily revolve around exploring, producing, refining, and distributing oil, refined petroleum, and natural gas products.
Colombia owns the majority of shares in Ecopetrol, and the company’s performance is a substantial portion of Colombia’s economy. Although it experienced some wild swings and irregularities with the pace of dividend payments a couple of times, the dividend yield has been incredibly high; it is at 18.64% as of December 2023.
EC stock price today
EC estimated annual dividend yield
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Where to buy energy dividend stocks
Anyone can purchase energy dividend stocks with the help of an online brokerage. If you consider this as well, we recommend you use eToro. Enjoying widespread popularity with over 30 million registered accounts, it stands out for its robust features, including:
- Commission-free stock and ETF trading;
- 2,000+ stocks from 17 exchanges;
- Fractional shares available;
- Charting tools;
- User-friendly platform.
Highly Rated Stock Trading & Investing Platform
-
Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
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Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
For additional trending investments to make this month, consider the following articles:
- 3 undervalued dividend stocks to buy this month;
- 3 oil dividend stocks to buy this month;
- 3 small cap dividend stocks to buy this month;
- 3 Warren Buffett dividend stocks to buy this month;
- 3 best UK dividend stocks to buy this month;
- 3 best dividend stocks to buy this month.
Pros and cons of buying energy dividend stocks
Pros
- Sector stability: Energy is a historically resilient sector, and energy dividend stocks may fare better during market volatility compared to certain cyclical industries;
- Dividend income: The stocks mentioned in this guide have the potential to form a steady income stream via regular dividend payments. This stable revenue can be attractive to income-focused investors;
- Inflation hedge: Energy companies tend to perform better during inflation, as the prices of energy commodities and services rise. This trend can be helpful in protecting the real value of your investment;
- Global Demand: The energy sector is essential to the worldwide economy. Energy companies can benefit from consistent and increasing demand for energy products and services.
Cons
- Commodity price volatility: Energy stocks are often bound to the prices of commodities like oil, petroleum products, and natural gas, which can be highly volatile, depending on numerous economic and geopolitical factors. Changes in commodity prices can significantly alter the profitability of energy companies;
- Technological shifts: The ongoing trend of switching from fossil fuels to renewable energy sources and technological advancements may threaten the entries on this list. Unless these companies adapt, investments in renewable energy sources may become more favorable, thus reducing the long-term prospects of these energy companies’ dividend stocks;
- Regulatory risks: Energy companies operate in a heavily regulated sector. Changes in government policies, legislation, environmental standards, or ecological consciousness can impact the operations and profitability of energy dividend stocks;
- Environmentalism: Companies in the energy sector are getting increasingly scrutinized due to their environmental involvement. Particular concerns about climate change and ecological sustainability could cause reputational and regulatory problems for some energy companies.
If you are interested in investing in the renewable energy sector rather than these petroleum companies, consider reading the following guides:
- How to buy Enphase Energy stock;
- How to buy First Solar stock;
- How to buy SolarEdge Technologies stock;
- How to buy SunPower Corporation stock;
- How to buy Array Technologies stock;
- How to buy Shoals Technologies Group stock;
- How to buy NEXTracker stock;
- How to buy Sunrun stock;
- How to buy Clearway Energy stock;
- How to buy Daqo New Energy Corp stock;
Common mistakes to avoid when investing
Make sure to avoid these common investing mistakes:
- Lack of research: Research these energy dividend stocks in detail, along with the market state of the fossil fuel and renewable energy sectors, before investing;
- Lack of strategy: Set your goals before you spend any money;
- Staking everything on one asset: Always diversify your portfolio;
- Falling prey to scams: Avoid illegal platforms and suspicious deals.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about energy dividend stocks
What are energy dividend stocks?
Energy dividend stocksrepresent fossil fuel or renewable energy companies that pay out a portion of their profits to stakeholders as dividends, providing a stable source of revenue.
Is it safe to invest in energy dividend stocks?
Although the energy sector tends to be less volatile than most others, every investment still carries an inherent risk. Perform your own research and follow the guidelines provided in this article before you spend any money.
How to invest in energy dividend stocks?
Investing in energy dividend stocks is straightforward; you must register an account with a regulated online brokerage like eToro, transfer some funds, and buy the shares.
What are the best energy dividend stocks to buy this month?
The three top energy dividend stocks to invest in this month are Equinor (EQNR), MPLX LP (MPLX), and Ecopetrol (EC).
