5 Best Energy Stocks to Watch in 2024

Energy is an interesting topic and occupies a relatively big section of the stock market. Some energy stocks are often high-dividend stocks and investing in them is a way to speculate on oil prices - although it is important to note the energy market is the most volatile stock sector. In this article, we cover various energy stocks to watch.

What are Energy Stocks?

Let's start at the beginning. What are energy stocks? Companies that work in the energy sector and have listed their shares on the stock market are known as energy stocks. Energy companies play a vital role in providing power to the world. The energy sector itself can be divided into different types based on the energy source. To give you a clear overview, we divided them into non-renewable and renewable energy companies. These different types of companies will be discussed below.

Non-Renewable Energy 

Non-renewable energies are fossil fuels like oil, natural gas, coal, and nuclear energy. These sources are finite and play an important role in global energy production. Companies in the non-renewable energy sector often focus on exploring, extracting, refining, and transporting these energy sources. 

Oil and Gas 

These companies search for, drill, and produce oil and natural gas. Their business models revolve around extracting these resources from the earth and selling them as fuels like gasoline, diesel, and natural gas. These stocks can be highly influenced by global oil prices. 

Pipeline and Refining 

After extraction, crude oil and natural gas need to be transported to refineries, where they are processed into products we can use and consume. Companies that build and maintain pipelines play a key role in delivering these raw materials, while refineries transform these resources into usable fuels and chemicals. 

Mining and Coal 

Coal mining companies extract coal, which is used in power generation. Although its usage has been declining in some parts of the world, coal is still a significant energy source, especially in regions where alternatives are less accessible. Mining companies also extract uranium, the fuel source for nuclear power. 

Renewable Energy 

Renewable energy is a growing and important sector as the world is now focused on climate change. These sources of energy can be renewed naturally. Some of these sources of energy are solar, wind, and hydropower. 

Solar and Wind  

These companies focus on using the power of the sun and wind to generate electricity. Solar panels and wind turbines have become common sights as renewable energy has grown rapidly over the past decade. These companies often attract investors looking for environmentally responsible investments and who are interested in contributing to the planet. 

Hydropower 

Hydroelectric plants use the flow of water to generate energy. This is one of the oldest forms of renewable energy, and it remains a stable and efficient source in regions with abundant water resources. 

Biofuels 

Some companies produce energy from organic materials, such as ethanol made from corn or sugarcane. This is an alternative energy source that provides a renewable option for fueling vehicles and machinery. 

5 Best Energy Stocks to Watch

Please note that the list of energy stocks to watch below is just a starting point and not an exhaustive list. Be sure to do your own research to identify what matches you and your portfolio.

1. Occidental Petroleum (OXY) - Petroleum company engaged in hydrocarbon exploration 
2. First Solar (FSLR) - Pioneer in renewable energy 
3. Chevron (CVX) - Leader in oil and natural gas exploration 
4. Shell (SHEL.UK) - Global energy giant 
5. NextEra Energy (NEE) - Sustainable energy solutions

1. Occidental Petroleum Corporation 

Occidental Petroleum Corporation (OXY) was founded in America in Los Angeles in 1920. Also known as Oxy, Occidental Petroleum is a major American company involved in the exploration and production of oil and natural gas. It operates in the United States, the Middle East, and Latin America.

What the Company Does

Oxy specializes in the exploration, production, and marketing of crude oil and natural gas. In addition to its traditional oil and gas operations, Oxy also plays a huge role in the production of petrochemicals through its subsidiary, OxyChem. The company is focused on carbon capture and storage technologies as part of its sustainability efforts. 

Market Cap

Oxy has a market cap of approximately $60 billion, making it a major player in the energy sector. 

Dividend Yield

Occidental’s dividend yield stands at around 1.1%.

2. First Solar 

Founded in 1999, First Solar (FSLR) is one of the leading manufacturers of solar panels and a pioneer in renewable energy. Headquartered in Arizona, First Solar focuses on creating eco-friendly solar solutions that contribute to reducing the global carbon footprint. The company’s innovative thin-film photovoltaic (PV) modules are highly sought after for utility-scale solar energy projects worldwide.

What the Company Does

First Solar designs, manufactures, and sells solar panels, providing clean energy solutions to power plants, utilities, and energy companies. The company is well-known for its commitment to sustainable practices, both in its manufacturing process and in its end products. It also offers maintenance services for large-scale solar installations.

Market Cap

First Solar's market cap is valued at around $20 billion, reflecting a dominant position in the renewable energy sector.

Dividend Yield

First Solar does not currently pay a dividend, as it reinvests profits to grow its renewable energy operations.

3. Chevron 

Chevron (CVX), founded in 1879, is one of the largest multinational energy corporations in the world. Headquartered in California, Chevron is a leader in both oil and natural gas production, with operations across six continents. Chevron plays a significant role in global energy markets, consistently adapting to the evolving needs of the industry.

What the Company Does

Chevron is engaged in all aspects of oil and gas production, from exploration and extraction to refining, marketing, and transportation. The company is also making investments in renewable energy, with projects in geothermal, solar, and wind power. Chevron’s product portfolio includes gasoline, diesel, jet fuel, and various petrochemical products.

Market Cap

Chevron has a market cap of roughly $310 billion, making it one of the largest oil companies in the world.

Dividend Yield

Chevron currently has a dividend yield of around 3.5%.

4. Shell

Shell (SHEL.UK) was founded in 1907 in the Netherlands and is a global energy giant. Over the past century, Shell has become one of the most recognisable names in the energy industry. Expanding its operations into oil, gas, and renewable energy sectors. The company has operations in more than 70 countries worldwide.

What the Company Does

Shell is involved in the exploration, extraction, refining, and marketing of oil and natural gas. In recent years, Shell has invested heavily in renewable energy, including solar, wind, and hydrogen. The company’s services span from producing fuel to selling energy products in its retail stations.

Market Cap

Shell’s market cap is around $190 billion, making it one of the largest energy companies in the world.

Dividend Yield

Shell currently offers a dividend yield of approximately 4%.

5. NextEra Energy 

NextEra Energy (NEE) was founded in 1984 in the United States. Since then, it has evolved into one of the leading companies in the renewable energy sector. With its headquarters in Florida, Nextera is primarily known for its investments in wind and solar power, with a big focus on sustainable energy solutions for the future.

What the Company Does

NextEra Energy is involved in the generation of clean energy, particularly from wind and solar power. It operates through two main subsidiaries: Florida Power & Light, which provides electricity to millions of customers in Florida, and NextEra Energy Resources, which focuses on developing renewable energy projects across North America.

Market Cap

NextEra Energy has a market cap of approximately $150 billion and is a major player in the renewable energy market.

Dividend Yield

Nextera Energy’s dividend yield is currently around 2.3%. 

Advantages and Disadvantages of Energy Stocks

Value stocks have many advantages and disadvantages of which a few are highlighted below.

Below is a list highlighting some of the pros and cons of investing in energy stocks. 

Advantages 

• Both fossil fuels and renewable energy sources are in constant demand which fuels demand for energy stocks, resulting in higher trading volume. 
• The performance of the energy market can sometimes be different to other stock sectors, offering a higher degree of diversification in a portfolio. 
• Some energy stocks can offer attractive dividends, making them appealing to investors looking for high-dividend stocks - if they can choose the right stocks which is challenging. 

Disadvantages 

• Energy stock prices can fluctuate wildly as the underlying energy sector is very volatile resulting in large swings in profit and loss. 
• An energy company can suddenly stop paying dividends causing many income investors to exit the stock market, causing a collapse in its share price. 
• Geopolitics has a huge impact on energy prices resulting in a much higher level of uncertainty and instability in stock prices.  
• Finding the stocks to invest in that will outperform the market is very challenging and even professionals get it wrong and lose. 

How to Invest in Energy Stocks

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You can learn more about trading and investing commissions on the Admiral Markets Contract Specification page. Search for global stocks and ETFs from the MT5 web platform and invest in four steps:

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Continue Reading:

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• How to Trade the US Stock Market
• The CFD Trading Guide

FAQs on Energy Stocks

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