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Don't Ignore These 3 Large-Cap Energy Stocks Yielding Over 4%

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Pulled down by multiple factors, U.S. oil prices have been struggling to get past the $80-a-barrel level. The EIA's revised forecast of global crude consumption at 104.5 million barrels per day for 2025, down 200,000 barrels from prior estimates, reflects concerns over a potential U.S. recession and a decelerating Chinese economy.

With a reduced demand growth rate of 1.6%, these factors have been exerting downward pressure on oil prices, highlighting vulnerabilities in global oil demand driven by economic uncertainties in major markets. Meanwhile, natural gas is currently trading around the lowly $2 level in the face of certain headwinds, including strong production and elevated stockpiles.

Given the current state of affairs in the energy sector, it seems a wise investment strategy to search for stocks that provide a solid level of defense and often come with dividend payouts. A group of stocks that fulfill these criteria are the large caps — defined as companies with a market capitalization of $10 billion or more.

The Williams Companies (WMB - Free Report) , Chevron (CVX - Free Report) and Canadian Natural Resources (CNQ - Free Report) stand out as compelling choices for investors seeking large-cap energy exposure.

Dividend Yield %

Zacks Investment ResearchImage Source: Zacks Investment Research

Why Large Caps?

These companies possess strong financial positions and established reputations, and enjoy extensive analyst coverage. Moreover, their consistent dividend payments make them popular among income-oriented investors. Investors seeking reliability and a solid track record will find these large-cap companies appealing.

While large-cap companies may offer less growth potential compared to their smaller counterparts, they compensate with a lower level of price volatility. This characteristic makes them an excellent choice for investors who prefer a steadier investment approach, free from drastic commodity price swings.

Our Choices

Williams Companies: Founded in 1908, Oklahoma-based The Williams Companies is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transporting natural gas and natural gas liquids.

The Tulsa, OK-based WMB beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 11.3%. Williams has a market capitalization of roughly $52.9 billion.

A major incentive for holding the WMB stock is dividend. With a quarterly payout of 47.50 cents, shares currently yielding 4.3% annually, well above the Zacks Oil/Energy sector average of 3.8%. Reflecting a shareholder-friendly nature, the Zacks Rank #2 (Buy) company has grown its payout by more than 4% over the last five years.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chevron: Based in San Ramon, CA, Chevron is one of the largest publicly traded oil and gas companies in the world, which participates in every aspect related to energy — from oil production to refining and marketing.

The Zacks Consensus Estimate for September-quarter earnings of Chevron indicates 3.6% growth. The Zacks Rank #3 (Hold) company has a market capitalization of roughly $264.6 billion.

With a quarterly payout of $1.63 per share, the CVX stock has a 4.4% dividend yield, above the generous sector average and significantly over the S&P 500’s 1.3% average.

Canadian Natural Resources: Established in 1973, Calgary-based Canadian Natural Resources is one of the largest independent energy companies in Canada. The #3 Ranked company boasts a diversified portfolio of crude oil (heavy as well as light), natural gas, bitumen and synthetic crude oil.

CNQ is valued at some $76.9 billion. The Canadian energy behemoth has a trailing four-quarter earnings surprise of roughly 7.2%, on average.

CNQ pays out a quarterly dividend of C$52.50, which gives it a 4.2% yield at the current stock price.


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Williams Companies, Inc. (The) (WMB) - free report >>

Chevron Corporation (CVX) - free report >>

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