Do you want to know the best oil stocks you can invest $200 in? If you do, keep reading.
Oil prices can change a lot. This fact makes investing in oil-related companies a bit tricky. If you are thinking about trading oil stocks, it is important to understand how unpredictable oil prices can be. However, this same fact can also give you different ways to approach investing.
For example, three companies, Chevron, Devon Energy, and TotalEnergies, each provide unique options if you are interested in oil stocks and have at least $200 to invest. Let’s take a deep dive into what makes each of them different.
1. Chevron
Chevron is a big energy company that works in many parts of the energy business. It does not just produce oil and natural gas (upstream). It also handles pipelines (midstream) and processes oil into things like gasoline and chemicals (downstream). This mix of different parts of the energy industry helps the company make money even when some areas are struggling.
For example, if oil prices are low and it is harder to make money producing oil, the refining part of the business can still do well because it benefits from cheaper oil. While Chevron can’t completely escape the ups and downs of oil prices, it has other things going for it. Its wide range of operations makes the impact of the fluctuations a little less severe.
The company is also good at managing its finances, which helps it survive tough times. Even during bad periods for the energy industry, Chevron has kept paying and increasing its dividends. In fact, it has raised its dividend every year for 37 years. This is quite impressive, especially with how unpredictable oil prices can be. If you are looking for a steady energy stock with good payouts (its dividend is currently 4%), Chevron is one of the best choices.
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2. Devon Energy
Chevron is known for being steady and predictable, but Devon Energy is the opposite. Devon focuses on producing oil and natural gas in major areas in the U.S. It does not have other types of businesses to balance out the ups and downs of selling oil and gas. This makes Devon’s profits fluctuate a lot. How it performs heavily depends on how energy prices change. Because of this, Devon’s stock prices can rise or fall quickly based on big changes in energy prices.
If you think oil prices will go up, investing in Devon could give you higher profits than Chevron. However, you should keep in mind that there is also a bigger chance of losing money if oil prices drop. Even though the main factor with Devon Energy is how energy prices change, there are other things to know.
Devon is a well-known and respected company that operates in several parts of the U.S. It has a strong financial position, more than 10 years’ worth of drilling inventory, and it can still make money even if oil prices are lower than usual. So, investing in Devon is not a reckless move. It is more like taking a smart risk on the chance that energy prices will rise. When you take the educated bet, you will be assured that the company won’t collapse, even if you are wrong.
3. TotalEnergies
TotalEnergies and Chevron are both huge companies in the energy industry, and they compete with each other. Chevron is a favorite for many investors because it has a strong record of paying out dividends.
However, TotalEnergies has something special that Chevron does not have. It has a big focus on clean energy and electricity. About 10% of TotalEnergies’ profits in the first nine months of 2024 came from its clean energy efforts. This part of the company grew by 20% compared to the year before.
TotalEnergies is serious about clean energy, which is important for people who are worried about the future of oil and gas. Unlike some of its European competitors, BP and Shell, TotalEnergies did not cut its dividend when it started focusing more on clean energy.
In fact, while BP and Shell have stepped back from their clean energy plans, TotalEnergies has stayed committed to moving forward with it. With a solid 5.5% dividend return, TotalEnergies is a smart choice for investors who want more than just oil in their portfolio.
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Picking the Best Oil Stock
At the end of the day, there isn’t just one correct way to invest in oil stocks. It depends on what works best for you. If you want a simple option, Chevron is a solid choice. It is a big energy company with big and steady dividend yields and it offers good returns over time.
If you are willing to take more risks and believe oil prices will rise, Devon Energy might be a better pick. For those who want to invest in oil but also believe clean energy will become a bigger deal in the future, TotalEnergies could be a smart option. This is because they are focused on both oil and clean energy.