Best Oil Stocks of 2021

Though many oil companies have retreated from their mid-decade peaks, the best oil stocks remain some of the highest dividend-payers on the market. Many of these firms have conservatively run businesses — converting their vast oil reserves into cash for shareholders. Others have more aggressively moved into renewable energy, including onshore/offshore wind, solar power and biofuels. As the world looks to cleaner energy, you can expect these companies to adapt to a changing world.

Frequently Asked Questions

What are the best oil stocks?

The best oil stocks have natural monopolies around their businesses. Gas pipeline companies like Enterprise Products Partners (NYSE:EPD) and Pioneer Natural Resources (NYSE:PXD) use their dominant positions to pay dividend yields that approach 10%. Meanwhile, oil services company Schlumberger (NYSE:SLB) operates as a near-monopoly in drilling services thanks to its high-tech methods of extracting shale oil.

Because oil itself is a commodity, the best oil companies need to differentiate themselves in some other way than low prices.

Are oil stocks a good investment?

The top oil companies are still alive and well — even with more renewables, the demand for oil and gas will remain for decades. Several shale oil producers, such as Devon Energy Group (NYSE:DVN) and Apache (NASDAQ:APA) have even become known as “Democrat Darlings” for their ability to meet new regulatory requirements. Others have invested entirely in greener energy; companies like Cheniere Energy (NYSE:LNG) are now looking to export liquified natural gas to fuel growth.

Is it unethical to buy oil stocks?

Many of the top oil executives have long worried about their environmental impact. The best of them have quickly moved to apply their knowledge to developing renewable energies. BP (NYSE:BP) has long been a leader in U.S. wind production, while France-based Total (NYSE:TOT) looks on track to produce 35 gigawatts in solar energy by 2025. Not every oil company is so forward-looking — Exxon Mobil (NYSE:XOM) ranks dead last among the oil majors in renewables. But for every laggard in the oil industry, plenty more are busy preparing for a greener future.

Can you buy oil stock?

Investors can buy into oil prices directly through ETFs like the United States Oil Fund (NYSEARCA:USO). But there’s a catch. Because oil itself doesn’t generate profits or dividends, buying the raw commodity isn’t usually profitable for the long-term: USO has lost 87% since 2014. Oil producers, pipelines, and exporters, on the other hand, can generate investor profits by adding value to the oil they extract and process.

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