Investment Tips 02-11-2023 01:01 12 Views

Top 5 US Oil and Gas Dividend Stocks in 2023

Major oil and gas stocks have historically offered investors high dividend yields, especially when prices are strong.

In 2022, oil and gas stocks continued their recovery from COVID-19 lockdowns, and got a boost from the impact of Russia’s aggression in Ukraine, which further highlighted already precarious supply problems. Although the threat of a looming global recession has dampened oil prices throughout 2023, analysts remain bullish on the prospects for oil and gas stocks this year. It remains to be seen what impact the Israel-Hamas war will have on oil prices going forward, but the market could be in for another jump in prices if the conflict spreads to other regions in the Middle East.

Because of those and other factors, this segment of the stock market is flush with dividend yields of over 4 percent. A dividend is part of a company’s profits that is paid out regularly to shareholders, typically quarterly.

“The dividend yield is a financial ratio that represents the dividend income per share, divided by the price per share,” explains Investopedia. “It is considered a sign of clear financial health and confidence for a company to pay out dividends.”

A dividend’s payout ratio is the total amount of dividends paid out to shareholders relative to the company’s net income. Some companies are known as dividend aristocrats, meaning they consistently pay a dividend and increase the size of the payout each year.

For those who prefer a long-term approach to investing, oil and gas stocks with high dividends allow for a steady flow of income and the opportunity for investors to increase their equity holdings.

1. Civitas Resources (NYSE:CIVI)

Company Profile

Market cap: US$7.34 billion; dividend yield: 10.17 percent; debt-to-equity ratio: 0.6

Civitas Resources operates wells across the Denver-Julesburg and Permian basins, and boasts that it is the first carbon-neutral oil and gas producer in the state of Colorado. During 2022, the company reported an average daily sales volume of 170,035 barrels of crude oil equivalent a day (boe/d), up 204 percent from the previous period.

Civitas Resources’ high dividend yield and low debt-to-equity ratio is highly attractive to investors. The company paid a fixed-plus-variable dividend of US$1.74 per share on September 29, 2023. This total includes a quarterly base dividend of US$0.50 per share and a quarterly variable dividend of $1.24 per share.

2. Devon Energy (NYSE:DVN)

Company Profile

Market cap: US$30.95 billion; dividend yield: 7.14 percent; debt-to-equity ratio: 0.55

Headquartered in Oklahoma City, Devon Energy has onshore oil and natural gas operations in five top-tier resource regions in the United States: the Delaware Basin, Eagle Ford, Anadarko Basin, Powder River Basin and Williston Basin. A Fortune 500 company, Devon is also included in the S&P 500 Index.

The company has been paying regular quarterly cash dividends since 1993. Its most recent dividend was paid out on September 29, 2023, at US$0.49 per share. So far in 2023, Devon Energy has paid out a total dividend of US$2.10 per share to investors.

3. Crescent Energy (NYSE:CRGY)

Company Profile

Market cap: US$2.18 billion; dividend yield: 4.77 percent; debt-to-equity ratio: 0.39

Crescent Energy’s oil and gas portfolio consists of both mid-cycle unconventional and conventional assets in the Eagle Ford and Uinta basins. The company’s production guidance for its 2023 fiscal year is pegged at 143,000 to 148,000 boe/d.

Crescent Energy pays out a quarterly dividend to its shareholders based on its policy to distribute 10 percent of adjusted EBITDAX at guidance pricing. Its most recent dividend was issued on September 6, 2023, at US$0.12 per share. Taken together, the company’s first three dividend payments of the year add up to US$0.41 per share.

4. Epsilon Energy (NASDAQ:EPSN)

Company Profile

Market cap: US$120.35 million; dividend yield: 4.55 percent; debt-to-equity ratio: 0

Epsilon Energy has oil and gas operations in the hydrocarbon-rich regions of Pennsylvania, Texas, New Mexico and Oklahoma. The company’s total estimated net proved reserves come to 90,040 million cubic feet of natural gas, 491,226 barrels of natural gas liquids and 211,059 barrels of crude oil and other liquids.

Epsilon paid a quarterly dividend of US$0.0625 per share to its shareholders on September 29, 2023, bringing its annualized dividend payout to US$0.25 per share.

5. Phillips 66 (NYSE:PSX)

Company Profile

Market cap: US$50.42 million; dividend yield: 3.7 percent; debt-to-equity ratio: 0.61

Based in Houston, Texas, diversified energy company Phillips 66 has operations across the midstream, chemicals and refining industries. In its Q2 financial report, the company highlights that since July 2022 it has returned US$5.4 billion to shareholders through share repurchases and dividends. Phillips 66 has a target of US$10 billion to US$12 billion in shareholder distributions by the end of 2024.

Phillips 66 recently declared a divided payout of US$1.02 to be distributed on December 1, 2023, to shareholders of record as of November 17, 2023.

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

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