Why These Two Energy Stocks Are Attracting Income-Focused Investors

The Undeniable Role of Energy in Modern Portfolios

Oil and natural gas remain irreplaceable in today’s economy—they power vehicles, heat homes, and fuel industrial processes. Yet many income investors overlook energy stocks despite their potential for consistent returns. The sector deserves serious consideration for any portfolio seeking steady cash flow, and two companies stand out as particularly compelling options right now.

Chevron Corporation (NYSE: CVX) is delivering a 4.5% dividend yield, while Enterprise Products Partners (NYSE: EPD) offers an even more attractive 6.8% distribution yield. Both represent meaningful opportunities in the energy patch, but they take different approaches to generating shareholder returns.

Chevron’s Resilience Through Commodity Cycles

What makes Chevron particularly noteworthy is its ability to weather the notorious volatility of energy markets. Most conservative investors shy away from oil and gas due to price swings, but Chevron has engineered structural advantages that help it thrive through cycles.

The company operates as an integrated energy giant, meaning it participates across the entire value chain—from upstream oil and gas production through midstream pipeline operations to downstream refining and chemicals. This diversification across multiple segments acts as a natural shock absorber. When crude prices fall, different parts of the business perform differently, helping to offset downturns.

Equally impressive is Chevron’s fortress-like balance sheet. The company maintains a debt-to-equity ratio of just 0.22, one of the strongest in the industry. This financial discipline is crucial: it allows Chevron to actually take on additional debt during downturns, preserving cash flow to maintain operations and dividend payments while competitors struggle. Once commodity prices recover—as they historically have—Chevron pays down the debt again.

This financial flexibility has proven its worth. Chevron has increased its dividend for 38 consecutive years, an extraordinary achievement given the sector’s inherent turbulence. The current 4.5% yield handily beats the energy sector average of 3.2% and towers over the S&P 500’s meager 1.1%.

Enterprise Products: The Steady Toll-Taker

For investors seeking an even higher yield with potentially lower risk, Enterprise Products Partners presents an interesting alternative. This master limited partnership generates a 6.8% distribution yield and has increased that distribution annually for 27 years.

Enterprise’s secret is its focus on the most dependable segment of the energy patch—midstream infrastructure. Rather than betting on commodity prices, the company owns and operates pipelines, storage facilities, and other systems that move oil and natural gas globally. It earns steady fees regardless of price swings, creating what might be called a “boring but profitable” business model.

The math supports this strategy. Enterprise generates distributable cash flow that covers its distribution 1.7 times over, offering substantial cushion before any cut would be necessary. The company also maintains an investment-grade credit rating, meaning it can access capital markets if needed.

The caveat: Master limited partnerships don’t fit comfortably in tax-advantaged retirement accounts like IRAs, and they generate K-1 tax forms that require extra accounting work. For many income investors, however, that administrative burden is worth the enhanced yield.

Making the Choice

Both opportunities reflect the reality that energy remains central to global functioning for the foreseeable future. For conservative dividend investors, Chevron offers a balanced approach with proven resilience and a solid yield that exceeds most equity income alternatives.

Enterprise Products is arguably the safer choice for risk-averse investors—its toll-taking model and strong coverage ratios provide notable downside protection.

The key takeaway: investors seeking reliable income have compelling options in today’s energy sector, despite—or perhaps because of—the volatility that surrounds it.