Major oil and gas stocks have historically offered investors high dividend yields, especially when prices are strong.
The US oil and gas market has responded surprisingly well to the continued volatility in the global markets, including ongoing conflict in the Middle East, the Russia-Ukraine war and economic uncertainty.
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.
A dividend is part of a company’s profits that is paid out regularly to shareholders, typically quarterly. When determining which dividend stocks are good options, there are some terms investors should know, including dividend yields, payout ratios and debt-to-equity ratios.
A dividend yield represents the dividend income per share divided by the share price. Currently, the oil and gas segment of the stock market is flush with dividend yields of over 4 percent.
A dividend’s payout ratio is the total amount of dividends paid out to shareholders relative to the company’s net income. Lastly, the debt-to-equity ratio shows how much company financing is generated from debt rather than equity.
The energy sector stocks on this list had strong dividends yields of greater than 4.9 percent as of that date, as well as debt-to-equity ratios of 0.35 and lower.
1. Vitesse Energy (NYSE:VTS)
Market cap: US$775.81 million
Dividend yield: 9.14 percent
Debt-to-equity ratio: 0.2
The top high-dividend oil stock on this list is Vitesse Energy, which owns financial interests in oil and gas wells operated by leading US operators primarily in the Bakken oil field in the state of North Dakota.
Prior to its December 2024 definite agreement to acquire Lucero Energy (TSXV:LOU,OTCQB:PSHIF), Vitesse was not itself an oil and gas producer, but it would become one if the acquisition closes. As of Q3 2024, Lucero had approximately 6.4 million barrels of oil equivalent per day (boe/d) of two stream net production.
Vitesse shareholders of record as of December 16 received a quarterly dividend payment of US$0.525 per share on December 31, 2024. If the Lucero acquisition is approved and completed, Vitesse expects to increase its cash dividend from US$2.10 to US$2.25 per share on an annualized basis.
2. TXO Partners (NYSE:TXO)
Market cap: US$709.03 million
Dividend yield: 8.25 percent
Debt-to-equity ratio: 0.25
TXO Partners is acquiring, developing and operating conventional oil, natural gas and natural gas liquid reserves in the Permian Basin of West Texas and New Mexico, the San Juan Basin of New Mexico and Colorado and the Williston Basin of Montana and North Dakota.
TXO’s most recent quarterly dividend payment to shareholders was distributed on November 22, 2024, at US$0.58 per common unit. It was paid to those who were eligible unitholders of record on November 15.
3. Granite Ridge Resources (NYSE:GRNT)
Market cap: US$900.83 million
Dividend yield: 7.31 percent
Debt-to-equity ratio: 0.3
Granite Ridge Resources invests in public and private oil and gas operators drilling high-grade wells in the US across five unconventional basins: the Permian, Eagle Ford, Bakken, Haynesville and DJ.
In its Q3 2024 results, the company reported average production of 25,177 boe/d from its portfolio of assets, generating a reported net income of US$9.1 million.
Granite Ridge paid out a quarterly dividend of US$0.11 per share of common stock on December 16, 2024, to shareholders of record as of November 29.
4. Diamondback Energy (NASDAQ:FANG)
Market cap: US$51.03 billion
Dividend yield: 5.15 percent
Debt-to-equity ratio: 0.35
Diamondback Energy is a Texas-based oil and gas company headquartered with operating unconventional, onshore oil and natural gas reserves assets in the Permian Basin. The company completed a merger with another Texas oil and gas company, Endeavor Energy Resources, on September 10, 2024. Diamondback reported average production of 571.1 million boe/d for the third quarter 2024.
Diamondback shareholders received a quarterly cash dividend of US$0.90 per common share on November 21, 2024. The company says it has returned over US$8.6 billion to its shareholders since 2018.
5. Epsilon Energy (NASDAQ:EPSN)
Market cap: US$139.01 million
Dividend yield: 4.92 percent
Debt-to-equity ratio: 0.1
Epsilon Energy has oil and gas operations in the hydrocarbon-rich regions of Pennsylvania, Texas, New Mexico and Oklahoma. The company entered the Western Canadian Sedimentary Basin jurisdiction in Alberta, Canada, via two joint venture agreements in October 2024.
Epsilon reported revenues of US$7.29 million for Q3 2024, up 16 percent from the same quarter in the previous year. On December 31, Epsilon paid a quarterly dividend of US$0.0625 per share to its shareholders on record as of December 16, bringing its annualized dividend payout to US$0.25 per share.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
