The dividend yield on the S&P 500 is a mere 1.1%, rounded up, but that doesn’t mean the entire equity market lacks attractive equity-income opportunities. It’s simply a matter of knowing where to look.
Interestingly, some of the smallest sectors in the S&P 500 are where some of the largest dividend yields are found. Energy, which is the fourth-smallest sector in the S&P 500, yields 2.7% as measured by the S&P Energy Select Sector index. That gauge is a basket of the largest domestic energy stocks, ranked by market capitalization.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
These energy stocks deliver big dividends and the potential for significant upside. Image source: Getty Images.
All right, so 2.7% might not qualify as “jaw-dropping,” but investors shouldn’t be dismayed because the energy sector is home to an array of dividend payers (and growers) with higher yields with the potential to reward long-term investors.
In fact, there are 69 U.S.-listed energy stocks carrying dividend yields of at least 3% and sporting gains over the past 12 months. Here’s an interesting trio to consider.
1. Chevron is the stock for energy dividend dependability
One of the blue chip dividend stocks in the oil patch, Chevron (NYSE: CVX), yields 3.7%, but more important than that above-average yield is the integrated oil giant’s dividend reliability. The payout increase unveiled by the company earlier in 2026 marks the 39th consecutive year in which Chevron has boosted its dividend, providing income investors with the like-clockwork dependability they so desire.
Above-average yields and long track records of dividend growth are nice, but investors are right to demand dividend safety, too. Chevron offers that because it has operational expertise exceeding that of some rivals and has proven to be an adept cost-cutter over the years. Obviously, cost containment is vital in the capital-intensive exploration and production sector because it lowers producers’ break-even points.
Said differently, adept cost managers like Chevron can continue generating and growing profits even if oil prices slide. Speaking of oil prices, thanks to its cost-cutting prowess and a portfolio chock-full of high-quality assets, Chevron can, by some estimates, fund its dividend at $40 per barrel. That’s $57 below where West Texas Intermediate (WTI) settled on May 22.
Adding to the safety net is management’s commitment to shareholder rewards, which totaled $6 billion in the first quarter, spread across buybacks and dividends.
2. Drilling down on Delek Logistics
With a market capitalization of $2.7 billion, Delek Logistics Partners (NYSE: DKL) is a mid-cap stock, which might explain some of its anonymity. But with a dividend yield of 8.8% and fresh off an April payout increase, this stock arguably deserves more attention in the energy dividend conversation.
This midstream operator has multiple catalysts for share price appreciation and potential dividend growth, including year-over-year earnings growth of 23.7%. Additionally, the company is shedding its “captive” status from Delek (NYSE: DK), which owns 63.3% of the logistics firm, as it expects to source 80% of its 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA) from third parties.
Experienced equity income investors know that midstream energy is a great place to find dividends, but on the surface, it’s hard to tell many of these operators apart. Delek Logistics breaks from the pack by combining crude, natural gas, and water services, giving it some wide-moat advantages.
This energy stock may also be appealing to value investors because management views it as the cheapest company in the space, with a compelling growth trajectory ahead.
3. Connect with Kinetik
Kinetik Holdings (NYSE: KNTK) is another mid-cap midstream operator that doesn’t generate a lot of buzz, but it may also be a friend to dividend investors. It yields 6.3% and boosted its payout in January.
Kinetik, which has a significant footprint in the Delaware Basin, recently reiterated its 2026 EBITDA guidance with CEO Jamie Welch noting the company has “meaningful insulation” from near-term oil price gyrations. Welch also noted customers are pulling forward activity to 2027, positioning Kinetik for what could be another solid year.
There’s even more to like with this midstream operator. Kinetik is buying back stock and reducing debt, and those perks are accruing as the stock trades at discounts to peers despite Kinetik generating better net margins. That may be a sign markets aren’t fully appreciating this energy stock, but if that sentiment changes, the shares could rally.
Should you buy stock in Chevron right now?
Before you buy stock in Chevron, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chevron wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $472,852!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,317,207!*
Now, it’s worth noting Stock Advisor’s total average return is 984% — a market-crushing outperformance compared to 210% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Delek Us. The Motley Fool has a disclosure policy.
