3 Dividend-Paying Energy Stocks With 20%+ Upside Potential, According To Analysts

The energy sector has been a standout performer in recent years, driven by rising demand, supply constraints, and a global focus on energy security. For investors seeking a combination of income and growth potential, three energy stocks – Chevron Corporation CVX, Exxon Mobil Corporation XOM, and NextEra Energy, Inc. NEE – have caught the attention of analysts, who see significant upside potential in these dividend-paying giants.

Chevron Corporation

Chevron, one of the world’s largest integrated energy companies, has been on a tear lately, with analysts turning increasingly bullish on the stock. Mizuho recently maintained a Buy rating on Chevron and raised the price target from $200 to $205, implying a substantial 27.41% upside from the current price of $160.90. This sentiment is echoed by other prominent analysts, with Truist Securities and HSBC setting price targets of $170 and $174, respectively, resulting in an average price target of $183, suggesting a potential 12% upside.

Chevron’s strong performance can be attributed to its robust operational and financial results. In its latest earnings release, the company reported a 12% increase in worldwide production and returned $6 billion in cash to shareholders. With 36 consecutive years of dividend growth and a current forward dividend yield of 3.99%, Chevron offers investors an attractive combination of income and growth potential.

Exxon Mobil Corporation

Exxon Mobil, another energy behemoth, has also been gaining traction among analysts. Morgan Stanley recently reinstated coverage on the stock with an Overweight rating and a price target of $145, indicating a potential 24.62% upside from the current price of $116.35. Mizuho and UBS have also expressed optimism, with an average price target of $141.67 between the three firms, suggesting a potential 20.22% upside.

Exxon Mobil’s strong first-quarter 2024 results, with earnings of $8.2 billion and cash flow from operating activities of $14.7 billion, underscore the company’s ability to generate significant value for shareholders. The company’s commitment to shareholder returns is evident in its 25-year history of dividend growth, with a current forward dividend yield of 3.23%.

NextEra Energy, Inc.

NextEra Energy, a leading clean energy company, has also caught the eye of analysts. Wells Fargo recently maintained an Overweight rating on the stock and raised the price target from $85 to $95, suggesting a potential 23.81% upside from the current price of $76.73. BMO Capital has also expressed confidence in NextEra Energy, with an average price target of $81.67 between the three most recent analyst ratings, indicating a potential 6.12% upside.

NextEra Energy’s strong first-quarter 2024 results, with adjusted earnings per share growing by approximately 8.3% year-over-year, highlight the company’s ability to deliver solid financial and operating performance. With 28 consecutive years of dividend growth and a current forward dividend yield of 2.73%, NextEra Energy offers investors an opportunity to participate in the growing clean energy sector while enjoying a steady income stream.

Should You Buy These Dividend-Paying Energy Stocks?

While the strong performance and attractive dividend yields make these three energy stocks compelling opportunities, sophisticated investors understand the importance of diversification across various asset classes. Private market investments, such as real estate and private credit, can offer unique benefits and potentially higher returns compared to traditional stocks.

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