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Investing in energy stocks

Weigh the benefits and risks of investing in oil, gas, coal and natural gas.

Shannon Terrell

Updated

Feb 11, 2021

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Sector-specific investing can help you broaden and diversify your portfolio. But each sector comes with a unique assortment of benefits and risks.

What are energy stocks?

Energy stocks fit into the energy sector of the stock market — one of 11 sectors defined by the Global Industry Classification Standard (GICS). Companies in the energy sector focus on the location, mining and production of oil, coal and natural gas.

What subcategories are included in this sector?

Companies that fall within the energy sector can be sorted into the following subcategories:

Oil and gas. At the start of the supply chain, we find companies responsible for drilling and producing oil and natural gas.
Pipelines. These mid-stream providers transport oil and natural gas from the drilling site to their respective refineries.
Mining. Mining companies produce coal that helps fuel power plants.
Renewable energy. Those that produce wind and solar energy are considered renewable energy providers.
Chemicals. This subcategory is comprised of companies responsible for refining oil and gas into specialty chemicals.

How to invest in the energy sector

There are two ways to invest in the energy sector: individual stocks or exchange-traded funds. Individual stocks are highly liquid but offer limited exposure. Sector-tracking ETFs are less risky than stocks and offer portfolio diversification but typically pay lower dividends and have higher fees.
You’ll need a brokerage account to invest in stocks and ETFs. Here’s a quick look at the process:

Select a platform. Explore your brokerage account options to find the platform that best matches your investment goals.
Open an account. Most brokerage accounts can be opened online. You’ll need to fund your account before you can make trades.
Pick your securities. Use your platform’s research tools to search for stocks and ETFs by sector.
Place an order. Once you’ve found a security you’d like to purchase, place your order.
Track your investments. Monitor your investments by logging into your brokerage account.

What stocks are in the energy sector?

See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.

Company summary
Chevron Corporation, through its subsidiaries, engages in the integrated energy and chemicals operations in the United States and internationally. The company operates in two segments, Upstream and Downstream. The Upstream segment is involved in the exploration, development, production, and transportation of crude oil and natural gas; liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and processing, transportation, storage, and marketing of natural gas, as well as a gas-to-liquids plant. The Downstream segment refines crude oil into petroleum products; markets crude oil, refined products, and lubricants; manufactures and markets renewable fuels; transports crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car; and manufactures and markets commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. The company was formerly known as ChevronTexaco Corporation and changed its name to Chevron Corporation in 2005. Chevron Corporation was founded in 1879 and is headquartered in San Ramon, California.
Historical performance
Stock information
- Market capitalization: $272515596288
- P/E ratio: 10.7171
- PEG ratio: 2.5755
- Dividend yield: 0.0418%
Get more detailed information and learn how to buy CVX.US stock
Company summary
CVR Energy, Inc., together with its subsidiaries, engages in the petroleum refining and nitrogen fertilizer manufacturing activities in the United States. It operates in two segments, Petroleum and Nitrogen Fertilizer. The Petroleum segment refines and markets gasoline, diesel fuel, and other refined products. It also owns and operates a coking medium-sour crude oil refinery in southeast Kansas; and a crude oil refinery in Wynnewood, Oklahoma, as well as supporting logistics assets. This segment primarily serves retailers, railroads, farm co-operatives, and other refiners/marketers. The Nitrogen Fertilizer segment owns and operates a nitrogen fertilizer plant in North America that utilizes a pet coke gasification process to produce nitrogen fertilizer products; and a nitrogen fertilizer facility in East Dubuque, Illinois that produces nitrogen fertilizers in the form of ammonia and urea ammonium nitrate (UAN). It primarily markets UAN products to agricultural customers; and ammonia products to agricultural and industrial customers. The company was founded in 1906 and is based in Sugar Land, Texas. CVR Energy, Inc. is a subsidiary of Icahn Enterprises L.P.
Historical performance
Stock information
- Market capitalization: $3210960128
- P/E ratio: 4.0688
- PEG ratio: -2.16
- Dividend yield: 0.0626%
Get more detailed information and learn how to buy CVI.US stock
Company summary
Devon Energy Corporation, an independent energy company, explores for, develops, and produces oil, natural gas, and natural gas liquids in the United States. It operates in Delaware, Anadarko, Williston, Eagle Ford, and Powder River Basin. The company was incorporated in 1971 and is headquartered in Oklahoma City, Oklahoma.
Historical performance
Stock information
- Market capitalization: $29055746048
- P/E ratio: 7.7257
- PEG ratio: 0.48
- Dividend yield: 0.0633%
Get more detailed information and learn how to buy DVN.US stock
Company summary
Diamondback Energy, Inc., an independent oil and natural gas company, focuses on the acquisition, development, exploration, and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas. It focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin; and the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin in West Texas and New Mexico. The company also owns, operates, develops, and acquires midstream infrastructure assets, including 770 miles of crude oil gathering pipelines, natural gas gathering pipelines, and an integrated water system in the Midland and Delaware Basins of the Permian Basin. Diamondback Energy, Inc. was founded in 2007 and is headquartered in Midland, Texas.
Historical performance
Stock information
- Market capitalization: $27676450816
- P/E ratio: 8.7708
- PEG ratio: 1.201
- Dividend yield: 0.0445%
Get more detailed information and learn how to buy FANG.US stock
Company summary
Exxon Mobil Corporation engages in the exploration and production of crude oil and natural gas in the United States and internationally. It operates through Upstream, Energy Products, Chemical Products, and Specialty Products segments. The Upstream segment explores for and produces crude oil and natural gas. The Energy Products segment offers fuels, aromatics, and catalysts, as well as licensing services. The Chemical Products segment manufactures and markets petrochemicals including olefins, polyolefins, and intermediates. The Specialty Products segment offers performance products, including lubricants, basestocks, waxes, synthetics, elastomers, and resins. The company is involved in the manufacturing, trade, transport, and sale of crude oil, natural gas, petroleum products, petrochemicals, and other specialty products; and pursuit lower-emission business opportunities including carbon capture and storage, hydrogen, and lower-emission fuels. Exxon Mobil Corporation was founded in 1870 and is headquartered in Spring, Texas.
Historical performance
Stock information
- Market capitalization: $416477249536
- P/E ratio: 10.3237
- PEG ratio: 1.689
- Dividend yield: 0.0366%
Get more detailed information and learn how to buy XOM.US stock
Company summary
Halliburton Company provides products and services to the energy industry worldwide. It operates in two segments, Completion and Production, and Drilling and Evaluation. The Completion and Production segment offers production enhancement services that include stimulation and sand control services; cementing services, such as well bonding and casing, and casing equipment; completion tools that offer downhole solutions and services, including well completion products and services, intelligent well completions, and service tools, as well as liner hanger, sand control, and multilateral systems; production solutions comprising coiled tubing, hydraulic workover units, downhole tools, and pumping and nitrogen services; and pipeline and process services, such as pre-commissioning, commissioning, maintenance, and decommissioning. This segment also provides electrical submersible pumps, as well as artificial lift services. The Drilling and Evaluation segment offers drilling fluid systems, performance additives, completion fluids, solids control, specialized testing equipment, and waste management services; oilfield completion, production, and downstream water and process treatment chemicals and services; drilling systems and services; wireline and perforating services consists of open-hole logging, and cased-hole and slickline; and drill bits and services comprising roller cone rock bits, fixed cutter bits, hole enlargement, and related downhole tools and services, as well as coring equipment and services. This segment also provides cloud based digital services and artificial intelligence solutions on an open architecture for subsurface insights, integrated well construction, and reservoir and production management; testing and subsea services, such as acquisition and analysis of reservoir information and optimization solutions; and project management and integrated asset management services. Halliburton Company was founded in 1919 and is based in Houston, Texas.
Historical performance
Stock information
- Market capitalization: $34065682432
- P/E ratio: 13.079
- PEG ratio: 0.9271
- Dividend yield: 0.0168%
Get more detailed information and learn how to buy HAL.US stock
Company summary
Hess Corporation, an exploration and production company, explores, develops, produces, purchases, transports, and sells crude oil, natural gas liquids (NGLs), and natural gas. The company operates in two segments, Exploration and Production, and Midstream. It conducts production operations primarily in the United States, Guyana, the Malaysia/Thailand Joint Development Area, and Malaysia; and exploration activities principally offshore Guyana, the U.S. Gulf of Mexico, and offshore Suriname and Canada. The company is also involved in gathering, compressing, and processing natural gas; fractionating NGLs; gathering, terminaling, loading, and transporting crude oil and NGL through rail car; and storing and terminaling propane, as well as providing water handling services primarily in the Bakken Shale plays in the Williston Basin area of North Dakota. The company was incorporated in 1920 and is headquartered in New York, New York.
Historical performance
Stock information
- Market capitalization: $44387545088
- P/E ratio: 30.4232
- PEG ratio: 0.3593
- Dividend yield: 0.0121%
Get more detailed information and learn how to buy HES.US stock
Company summary
Kinder Morgan, Inc. operates as an energy infrastructure company in North America. The company operates through four segments: Natural Gas Pipelines, Products Pipelines, Terminals, and CO2. The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipeline, and underground storage systems; natural gas gathering systems and natural gas processing and treating facilities; natural gas liquids fractionation facilities and transportation systems; and liquefied natural gas gasification, liquefaction, and storage facilities. The Products Pipelines segment owns and operates refined petroleum products, and crude oil and condensate pipelines; and associated product terminals and petroleum pipeline transmix facilities. The Terminals segment owns and/or operates liquids and bulk terminals that stores and handles various commodities, including gasoline, diesel fuel, renewable fuel stock, chemicals, ethanol, metals, and petroleum coke; and owns tankers. The CO2 segment produces, transports, and markets CO2 to recovery and production crude oil from mature oil fields; owns interests in/or operates oil fields and gasoline processing plants; and operates a crude oil pipeline system in West Texas, as well as owns and operates RNG and LNG facilities. It owns and operates approximately 83,000 miles of pipelines and 140 terminals. The company was formerly known as Kinder Morgan Holdco LLC and changed its name to Kinder Morgan, Inc. in February 2011. Kinder Morgan, Inc. was founded in 1936 and is headquartered in Houston, Texas.
Historical performance
Stock information
- Market capitalization: $38565060608
- P/E ratio: 15.9174
- PEG ratio: 18.4687
- Dividend yield: 0.0651%
Get more detailed information and learn how to buy KMI.US stock
Company summary
Pioneer Natural Resources Company operates as an independent oil and gas exploration and production company in the United States. The company explores for, develops, and produces oil, natural gas liquids (NGLs), and gas. It has operations in the Midland Basin in West Texas. Pioneer Natural Resources Company was founded in 1997 and is headquartered in Irving, Texas.
Historical performance
Stock information
- Market capitalization: $55455215616
- P/E ratio: 11.324
- PEG ratio: 1.0327
- Dividend yield: 0.0587%
Get more detailed information and learn how to buy PXD.US stock
Company summary
Valero Energy Corporation manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, Latin America, and internationally. It operates through three segments: Refining, Renewable Diesel, and Ethanol. The company produces California Reformulated Gasoline Blendstock for Oxygenate Blending and Conventional Blendstock for Oxygenate Blending gasolines, CARB diesel, diesel, jet fuel, and asphalt; aromatics; and sulfur crude oils. It sells its refined products through wholesale rack and bulk markets; and through approximately outlets under the Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands. The company also produces and sells ethanol, dry distiller grains, syrup, and inedible corn oil primarily to animal feed customers. In addition, it owns and operates crude oil and refined petroleum products pipelines, terminals, tanks, marine docks, truck rack bays, and other logistics assets; and owns and operates a plant that processes animal fats, used cooking oils, and inedible distillers corn oils. The company was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in August 1997. Valero Energy Corporation was founded in 1980 and is headquartered in San Antonio, Texas.
Historical performance
Stock information
- Market capitalization: $42764300288
- P/E ratio: 4.2841
- PEG ratio: 0.2131
- Dividend yield: 0.0325%
Get more detailed information and learn how to buy VLO.US stock

What ETFs track the energy sector?

Popular ETFs in the energy sector include:

Energy Select Sector SPDR (XLE)
Vanguard Energy ETF (VDE)
iShares Global Energy ETF (IXC)

VanEck Vectors Oil Services ETF (OIH)
iShares U.S. Energy ETF (IYE)
Alerian MLP ETF (AMLP)

Compare solar energy stocks

How is the energy sector performing?

The stock market is in constant flux, and individual stocks can change prices second by second. But you can use the performance of ETFs to gauge the average performance of a stock market sector over time. The graph below tracks the Energy Select Sector SPDR ETF (XLE).

Why invest in energy stocks?

Energy is a resource the world depends on. The energy market is massive, and for good reason — this resource has been in high demand for many years. And even accounting for the shift towards clean energy, the world is still decades away from being free from oil, coal and gas.
Profitability in the energy sector is largely tied to the price of crude oil, but stock prices are typically stable and frequently pay dividends. Income from energy stocks may also be tax-sheltered — an attractive incentive for investors.

What unique risks does the energy sector face?

Politics play a sizable role in the energy sector. If companies explore for energy resources in unstable territories, projects are at risk of being sidelined or halted in the face of political turmoil.
Incorrect geological reports, oil spills and accidents can be costly for investors. This sector isn’t without its risks and investors should weigh the benefits against the drawbacks before allocating funds.

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Bottom line

The energy sector offers the opportunity for profit but carries a unique set of risks. The best way to invest depends on your portfolio and your investment goals. Review your trading platform options to find the brokerage account that best meets your needs.

Frequently asked questions

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Finder is not an adviser or brokerage service. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. All editorial opinions are our own.

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Shannon Terrell

Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga.

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Investing in energy stocks

Weigh the benefits and risks of investing in oil, gas, coal and natural gas.

What are energy stocks?

What subcategories are included in this sector?

How to invest in the energy sector

What stocks are in the energy sector?

Chevron (CVX.US)

CVR Energy (CVI.US)

Devon Energy Corporation (DVN.US)

Diamondback Energy (FANG.US)

Exxon Mobil (XOM.US)

Halliburton Company (HAL.US)

Hess Corporation (HES.US)

Kinder Morgan (KMI.US)

Pioneer Natural Resources (PXD.US)

Valero Energy Corporation (VLO.US)

What ETFs track the energy sector?

How is the energy sector performing?

Why invest in energy stocks?

What unique risks does the energy sector face?

Compare stock trading platforms

Bottom line

Frequently asked questions

What types of companies are included in the energy sector?

What types of energy sources are included in the energy sector?

Shannon Terrell

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