11 of the Best Oil Stocks & ETFs

ProShares Ultra Bloomberg Crude Oil is a leveraged ETF that offers twice the returns as a normal index-tracking ETF. About 47% of the fund’s total investments are in those two companies. Due to its high concentration in these stocks, the Energy Select Sector SPDR Fund carries more individual stock risk than other, more diversified ETFs. Roughly half of the fund’s net assets consist of only two companies, Chevron Corporation and Exxon Mobil. Locally sourced Brent oil is closer and cheaper to ship, so international consumers tend to go with the option that offers the most value. Delivering WTI to high-demand markets in Europe and Asia can be so expensive that it can’t compete with Brent in terms of pricing.

Investors will want to consider having some exposure to the oil market in their portfolio. The International Energy Agency (IEA) expects oil demand to continue growing through 2030. Oil companies should be able to increase their production and cash flow to meet demand, giving them the funds to provide value to their shareholders through share repurchases and dividend payments. Oil prices are notoriously volatile, often quickly changing on any whiff of imbalance between supply and demand. The cyclical nature of the oil market is a big driver of volatility, with demand ebbing and flowing with the global economy. Oil Exchange Traded Funds (ETFs) are a popular investment choice if you find futures trading inconvenient, or if you want to diversify your portfolio.

Quick Look: The Best Oil ETFs

HXE is rated as a high-risk fund which is in line with most energy-focused funds and investments. Since the fund invests in the Canadian energy sector as a whole, it is not a 100% oil-concentrated investment. Between the beginning of 2020 and mid-2022, the Canadian energy sector (as well as HXE) has performed exceptionally well due to rising oil prices. Finding the best oil stocks can be challenging due to the unpredictable nature of the oil business, with factors like accidents, price fluctuations, and the risks of exploring new oil fields. However, the diversification offered by ETFs can be a solution, allowing investors to gain exposure to the entire sector, not just the producers.

Oil & gas ETFs offer investors an efficient way to gain exposure to the energy sector without having to purchase individual stocks of oil and gas companies. Identifying the best oil stocks is crucial, especially since oil prices and oil stocks tend to move cyclically. As a general rule, the best time to buy them is when oil prices fall and investors are dumping the sector, and the best time to sell is when prices cycle up, and conventional investors rush to buy.

However, the oil producer has increased its payment every Best oil etf year since resetting the payout in 2016 following a deep oil market downturn. It has been delivering accelerated dividend growth in recent years (11% in 2022, 14% in 2023, and 34% in 2024). Chevron should have no trouble continuing to increase its dividend in the future. The oil company expects to add $10 billion to its annual free cash flow by 2026, fueled by high-margin production growth and cost-cutting initiatives.

Accommodating your present and the future requirements. Choose an instrument to explore market depth.

ZEO passively tracks the Solactive Equal Weight Canada Oil & Gas Index. Below we look at the oil ETFs with the best 12-month performance, lowest fees, and most liquidity. Oil prices, as measured by the Bloomberg Composite Crude Oil Subindex, have dropped by 26% over the past 12 months, significantly underperforming the S&P 500 Index’s 20% gain. We did not receive compensation from any companies whose stock is mentioned in this report. No part of the writer’s compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed in this article. Vertigo Studio SA is not responsible and cannot be held liable for any investment decision made by you.

• Within InvestingPro you can find and compare the performance across ETF benchmarks.
• Despite the high fees, the fund has provided investors with an excellent rate of return.
• The oil producer’s target is to deliver dividend growth in the top 25% of companies in the S&P 500 in the future.

Bloomberg Brent Crude performance

Oil services companies offer a variety of energy-related services, including exploration, equipment maintenance, refining, and much more. There are dozens of funds to choose from, so it is sure to fit your investment objectives and risk tolerance. You’ve got geopolitics, climate pressures, dodgy balance sheets, and management missteps to contend with. OIH gives you leveraged exposure to drilling and engineering companies riding the oil wave.

Canadian ETFs that provide exposure to the oil sands industry include funds like the iShares S&P/TSX Capped Energy Index ETF (XEG) and the BMO Equal Weight Oil & Gas Index ETF (ZEO). The long-term performance of oil as a commodity has been extremely volatile and likely only rewarded investors who were lucky to invest at specific points in time. Adding oil exposure varies slightly depending on whether you are investing in an oil futures ETF or an energy ETF. HOG is a high-risk fund, similar to most peers within the oil and gas space. BMO’s ZEO comes with a long performance track record and is a large ETF by assets. The ETF pays a great dividend yield on a quarterly basis, which will be attractive for investors looking for yield.

Energy Select Sector SPDR Fund (XLE)

• Rapidly rising oil prices between early 2020 and mid-2022 have led to strong performance for XEG during this time.
• The top three holdings for IEO are ConocoPhillips; EOG Resources Inc. (EOG), an oil and gas exploration and production company; and Pioneer Natural Resources Co. (PXD), a hydrocarbon exploration company.
• OPEC+ had agreed to boost production amid fears of a global economic slowdown, which would drive down demand for oil.
• Investors interested in gaining access to the oil sector should do so via an Oil ETF.

PXI tries to capture trends and ride the wave – perfect if you like technicals over fundamentals. WTI is a US-based benchmark, while Brent is an international benchmark. Their prices can differ due to supply, demand, and logistical factors.

For perspective, last year, Chevron produced $15 billion in free cash flow and paid $11.8 billion in dividends. Its surging free cash flow, which doesn’t factor in closing its highly accretive acquisition of Hess, should give it plenty of fuel to continue growing its high-yielding dividend at an above-average rate. With over $70 billion in assets under management (AUM), it’s the second-largest ETF focused specifically on dividend stocks.

Ultimately, even if oil runs out, the company will still own a lot of land and water rights in a state that is experiencing an economic and demographic boom. This is a stock with some inherent minimum value, providing some safety no matter what, which is why it’s one of the best oil stocks out there. Rather than storing barrels of oil yourself, crude oil ETFs allow you to invest in oil price contracts, futures, and options, which are a much more efficient and safer way to invest in oil. They can choose a fund that resembles the performance of crude oil or one that invests in oil-related stocks.

The most inexpensive Canadian ETF offering investors exposure to oil is the HXE. The ETF targets the broad energy sector in Canada and includes the stocks of companies involved in various stages of the energy process, including extraction and transportation. Downstream activities in the oil and gas industry involve the refining, processing and distribution of crude oil and natural gas products. Downstream companies take the raw materials produced by upstream activities and convert them into finished products such as gasoline, diesel fuel, jet fuel and petrochemicals. An example of a downstream oil ETF is theVanEck Vectors Oil Refiners ETF (CRAK). Upstream activities in the oil and gas industry involve the exploration, drilling, and production of crude oil and natural gas.

Vanguard’s refined indexing process, combined with low management fees and efficient trading, has provided a tight tracking net of expenses. Exchange Traded Funds are the easiest and safest investment to take advantage of the huge oil and gas sector all the while protecting your investment from the volatility of this sector. They offer a low-cost option to get exposure to the oil and gas sector. The answer to this question depends on your time horizon, investment objectives, and risk tolerance. In general, an allocation to Canadian oil ETFs is best suited for long-term investors who are prepared to accept long periods of possible underperformance and high volatility. One benefit of Canadian oil ETFs is the possibility of an increased distribution schedule.

Best Commodities Stocks & ETFs

In such a scenario, Transocean could struggle to manage its still heavy debt load. Transocean stock is a bet on the continuous need for new oil & gas resources, and especially offshore resources, which appear to be one of the cheapest sources of new supply. The company is trading relatively cheaply, especially considering its growth profile, due to the possible risk of sanctions and US-China geopolitical sanctions. As a result, it offers a high dividend yield and low P/E, as well as risks that are very real but very difficult to quantify.