The Energy sector is known for its unpredictability, with prices often rising and falling sharply. While oil and gas investments have always faced market swings, uncertainty has grown even more since the COVID-19 pandemic.

In this ever-changing environment, a dividend increase can be a strong signal from management. It usually shows confidence in the company’s future, as higher dividends are typically backed by expected cash flow growth. This decision suggests management’s belief that future earnings will be enough to sustain the increased payouts.

4 Companies Enhancing Their Dividends

Now, let's examine four energy companies — Chevron (CVX Quick QuoteCVX - Free Report) , Imperial Oil (IMO Quick QuoteIMO - Free Report) , Northern Oil and Gas (NOG Quick QuoteNOG - Free Report) and Magnolia Oil and Gas (MGY Quick QuoteMGY - Free Report) — that recently raised their dividends.

Chevron is one of the largest publicly traded oil and gas companies in the world with operations that span almost every corner of the globe.

CVX said on Friday that it will pay out a cash dividend of $1.71 per share of record on Feb. 14. The company’s dividend represents a 5% increase in its quarterly dividend rate, providing an annualized dividend of $6.84 per share. Following the hike, CVX’s dividend yield comes to 4.5%.

Next up is Imperial Oil, one of the largest integrated oil companies of Canada, mainly engaged in oil and gas production, petroleum products refining, and marketing and chemical business.

Last week, IMO increased the quarterly dividend by 20%. The Zacks Rank #2 (Buy) company will pay a dividend of 72 Canadian cents per share against 60 Canadian cents last quarter. Calculating a 2.9% annualized yield, this payout increase comes into effect with the one to be paid on Apr. 1, 2025.

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

Northern Oil and Gas also deserves a mention in this list. The upstream firm, which employs a unique nonoperating business model, is focused on three leading basins of the United States — the Williston, Permian and the Appalachian.

On Jan. 28, NOG announced it would raise its quarterly payout from 42 cents to 45 cents, good for a 7% increase. The hike will go into effect for the April dividend payout, which will go to the holders of the stock as of March 28. The new dividend yield at the current share price would amount to roughly 4.9%.

Finally, we have Houston, TX-based Magnolia Oil & Gas. It is an independent exploration and production operator focused on the Eagle Ford Shale and Austin Chalk formations in South Texas.

Earlier this week, MGY unveiled a 15% quarter-over-quarter rise in cash dividend to 15 cents per share, which translates to an annualized dividend yield of 2.5%. The dividend is payable March 3, 2025, to shareholders of record on Feb. 14, 2025.