Before digging deeper into the buying opportunities in best energy dividend stocks, it’s wise to briefly look at oil price fundamentals because energy stocks’ performance is directly correlated to oil prices. Oil prices recovered to $60 a barrel at present after dipping to the negative territory last year. Still, the market pundits see more upside. For instance, Goldman Sachs forecasts oil price to hit $70 level during the second quarter and extend the upside momentum to $75 a barrel in the third quarter.
Low breakeven point make ConocoPhillips an attractive energy pick
The largest US-based exploration and production company ConocoPhillips (NYSE: COP), is among the best dividend stocks, and it is the biggest beneficiary of improving oil prices because of its lower breakeven point. The company’s potential to breakeven around $45 a barrel compared to strong oil projections means a strong balance sheet plus robust free cash flow generation and hefty dividends for investors. Moreover, the expectations for higher profits and dividends in 2021 would help the oil exploration and production company to sustain the share price upside momentum.
Chevron and Exxon are among the best energy dividends stocks
The most prominent and largest oil giants Chevron Corporation (NYSE: CVX) and Exxon Corporation (NYSE: XOM), have also sustained their dividends in 2020 despite a massive oil price collapse. Nevertheless, these two companies are likely to make big dividend increases in 2021 on the back of significant growth in oil prices. Chevron’s dividend yield currently stands around 5%, while Exxon’s dividend yield is well above 6%.
