For a long time, oil and gas companies have provided substantial dividends to investors by allocating a significant portion of their free cash flow to shareholder payouts, especially during periods of rising oil prices. Despite ongoing global market volatility, uncertainty surrounding conflicts in the Middle East and the Russia-Ukraine war, along with economic challenges and the pressures of transitioning to clean energy, the US oil and gas market has performed surprisingly well.
Dividends, which are a portion of a company’s profits distributed regularly (typically quarterly), are an attractive feature of the oil and gas industry. This cyclical sector sees increased revenue and cash flow during periods of high oil prices, which supports dividend payments and even increases. Meanwhile, during economic downturns, larger and more financially sturdy companies often maintain their dividend payouts to demonstrate strong balance sheets and financial resilience. Recently, US oil and gas companies have placed greater emphasis on shareholder returns, including increasing dividends, as reinvestment impulses in the sector have weakened in recent years.
However, investors should not solely focus on high dividend yields when choosing US oil and gas stocks; the quality of dividends is equally important. Factors like the dividend payout ratio and the debt-to-equity ratio are essential indicators to consider. Below is a list of five US oil and gas stocks, all of which boast dividend yields exceeding 4.9% (as of January 10, 2025) and debt-to-equity ratios of 0.35 or lower.
Vitesse Energy holds financial interests in oil and gas wells in North Dakota’s Bakken oil field. In December 2024, the company signed an agreement to acquire Lucero Energy. If the acquisition is completed, Vitesse’s annualized cash dividend is expected to increase from $2.10 per share to $2.25 per share.
TXO Partners focuses on acquiring, developing, and operating conventional oil, natural gas, and natural gas liquid reserves in various basins, including West Texas, New Mexico, Colorado, Montana, and North Dakota. On November 22, 2024, the company paid a quarterly dividend of $0.58 per share.
Granite Ridge Resources invests in public and private oil and gas operators, mainly targeting high-quality wells in five unconventional basins across the US: Permian, Eagle Ford, Bakken, Haynesville, and DJ. In its Q3 2024 report, the company reported daily production of 25,177 barrels of oil equivalent, earning a net income of $9.1 million.On December 16, the company distributed a quarterly dividend of $0.11 per share.
Diamondback Energy operates unconventional, onshore oil and gas reserve assets in the Permian Basin. In September 2024, the company completed a merger with Endeavor Energy Resources, another Texas-based firm, and reported average daily production of 571.1 million barrels of oil equivalent for Q3 2024. On November 21, 2024, Diamondback paid a quarterly cash dividend of $0.90 per share and has returned over $8.6 billion to shareholders since 2018.
Epsilon Energy operates oil and gas businesses in Pennsylvania, Texas, New Mexico, and Oklahoma. In October 2024, it entered the Western Canadian Sedimentary Basin in Alberta, Canada, through two joint venture agreements. The company reported Q3 2024 revenue of $7.29 million. On December 31, Epsilon paid a quarterly dividend of US$0.0625 per share to its shareholders, bringing its annualized dividend payout to US$0.25 per share.
These five stocks present not only attractive dividend yields but also strong fundamentals, providing investors with income and opportunities for long-term gains in the oil and gas sector.
